Eskom could collapse if tariff increase not finalised by March, court hears
Johannesburg - Embattled power utility Eskom said the country had far bigger problems than state capture to worry about.
On Wednesday, Fin24 reported that Eskom feared that if the tariff increase it wants was not finalised by March, it ran the risk of collapsing, which would plunge the country into a crisis.
Eskom has been struggling to keep South Africa’s lights on with rolling blackouts since late November as a result of its ageing infrastructure and structural defects at the Medupi and Kusile power stations.
The power utility, which has a crippling R450-billion debt, is also involved in a court battle with the National Energy Regulator of South Africa (Nersa) over the deduction of R69bn by the energy regulator from a bailout that Eskom received from the government.
Advocate Matthew Chaskalson, who represented Eskom at the High Court in Pretoria, where the power utility seeks interim relief, pleaded with the court to grant it a 16.6% tariff increase this year and a 16.7% increase for 2020/21, saying that if the power utility did not receive these increases, it would face a severe dilemma.
In court, Chaskalson argued that because R318bn of Eskom’s current debt was guaranteed by the state, if the utility defaulted because tariffs did not cover its costs, those guarantees would immediately become payable by the state, Fin24 said.
“If it comes to that, what consumers will experience will be far worse than they’ll experience under tariff increases. As much as consumers find pain in tariff increases, electricity prices in the country are too low,” he said.
Chaskalson added that the World Bank had advised Eskom that if it wanted to be on an equal footing with other electricity utilities, it needed to look at its tariff, as 81% of its problems were tariff related.
He further told the court to look past the state capture debate, as it diverts attention from the fact that Eskom’s tariffs are too low.
“We are not saying state capture was not a mess of history, but we are saying forget about state capture; let’s look at what reasonable tariffs would be in a regime where Parliament has agreed that electricity must be financed at the point of provision,” Chaskalson said.
The National Union of Mineworkers and National Union of Metalworkers of South Africa said they would picket at Eskom’s Megawatt Park office in Joburg in protest at the privatisation and unbundling of Eskom.