Cape Town - Eskom boss Phakamani Hadebe made a desperate plea for a 15% electricity tariff increase, and while apologising for the mess the state company finds itself in he admitted that price hikes alone would not be enough to cover an inevitable R50billion shortfall over two years.
Hadebe addressed civil groups and members of the public at the Cape Town leg of the National Energy Regulator of SA’s (Nersa) public hearings probing Eskom’s request for a 15% electricity tariff increase for 2019/20.
Painting a grim picture, Hadebe said Eskom’s total debt over the last 10 years increased to just over R400bn, adding that the crisis at Eskom was based on its money management and debt situation.
“South Africa has the cheapest electricity in the world, but that means nothing to the public out there. We also need to apologise to the public. There have been avoidable issues and it has been building overtime. It does, however, take time to change it. We understand that 15% is severe, but if we don’t do it we will have a much bleaker outlook,” he said.
Eskom chief financial officer Calib Cassim said municipalities owed Eskom billions and that they were recovering them.
“It takes a lot of doing, but we are getting the monies for arrears debts. But Eskom is in a dire financial state. We’re borrowing money to pay off other debt. Its like paying off one credit card with another. It’s not a sustainable environment to be in.”
Energy expert and member of the energy coalition Ted Blom questioned where the new dawn in electricity was.
“What is the outcome of the Eskom board’s turnaround strategy? The outcome of the Eskom ‘wise men’ report? Surely tariff increase are premature and an added three-year increase definitely unethical.
“Is it ethical to ignore the impact of inefficiency and corruption? Is it ethical to allow Eskom to ‘self-report’? Is it ethical for Eskom officials on whose watch all this happened to be involved with the increase process or still be in Eskom employ,” he said.
Blom also questioned how Eskom could allow the tariffs if it could lead to job losses.
“To hike the electricity tariff when Eskom acknowledges 134000 job losses for every 1% increase in tariff. Is it ethical to close business now with high tariffs, and expect them to come back later when tariffs decrease after findings,” he said.
The Organisation Undoing Tax Abuse (Outa) said it could not accept the high tariff hikes despite Eskom being broke.
Outa’s portfolio manager on energy, Ronald Chauke, said the public should not have to pay the price for Eskom’s corruption and poor leadership.
“At best, we propose that Nersa should not allow Eskom to exceed CPI, which is around the 5% mark, but instead, Eskom should find savings by reducing the headcount and staff costs, along with returning to lower primary energy costs by undoing the inflated and often corrupt contracts,” he said.
DA spokesperson on Public Enterprises Natasha Mazzone said the utility had debt to the amount of R419bn, and it was planning on increasing its debt further to R600bn in the next three years.
“It is, therefore, no wonder that Eskom is looking at ordinary citizens to foot the bill of its complete and utter failures and lack of planning,” she said.
South African Local Government Association representative Nhlanhla Ngidi said electricity sales were on a downward trend while municipal debt and theft were rising dramatically.