File picture: Reuters/ Mike Hutchings

Durban - Power producer Eskom would decide how to address a revenue shortfall following energy regulator National Energy Regulator of South Africa (Nersa) not approving its proposed financial needs, it said on Thursday

In a statement released on Thursday evening, Eskom said it noted the decision made by Nersa to approve R206.380bn, R221.843bn, R233.078bn, which translated to 9.41%, 8.10% and 5.22% price increases for years 2019/20 to 2021/22 respectively. 

Eskom had asked for a tariff increase of between 15 and 17% from April 1 for three consecutive years.  

The statement said the amounts approved excluded the approximately 4.4% already approved during 2018 for the Regulatory Clearing Account (RCA) recovery for the 2015- 2017 financial years. On the RCA application for year five (2017/18) of MYPD 3, Nersa approved an amount of R3.869bn.

Eskom had looked into cost efficiencies from its operations and was given support of R69 billion over the next three years, said the statement. This was an important step to restore Eskom’s credit worthiness as debt providers, rating agencies and other stakeholders awaited this crucial decision.  

"The Eskom Board will deliberate further before deciding on how best to address the shortfall and we keenly await the reasons for the decision as Nersa has disallowed R102 billion of revenue over the MYPD4."

Calib Cassim, Eskom’s Chief Financial Officer, said, “Eskom’s application was fully compliant and based on the current regulatory policy and methodology. The underpinning principle of the application was the need to ensure Eskom’s financial sustainability to enable it to fulfil its mandate to supply electricity to the country. 

"The methodology provides for the recovery of prudent and efficient input costs and as such the amount applied for was driven largely by expenditure on coal, maintenance and human resources, as well as the cost of servicing the debt raised to finance Eskom’s investment in South Africa’s energy infrastructure.”

The embattled power producer is R420 billion in debt. 

African News Agency (ANA)