Eskom defends need to hike rates

If government wants to use a different method of financing the capital spending plans of Eskom it must make that decision. Until that happens, they will raise money through increased tariffs and borrowing, Eskom chief executive Jacob Maroga told members of parliament on Friday.

If government wants to use a different method of financing the capital spending plans of Eskom it must make that decision. Until that happens, they will raise money through increased tariffs and borrowing, Eskom chief executive Jacob Maroga told members of parliament on Friday.

Senior officials of Eskom were defending their request to the regulator for an 18percent increase in tariffs.

Accused by MPs of subjecting the country to a price increase that will compromise the battle against inflation, Eskom chairman Mohammad Valli Moosa said: "We have to find a way of paying for the capital expenditure in a way that introduces as few distortions as possible into the economy. One way is to say let the taxpayer pay, the other is to say the user should pay. Either way would introduce a distortion, a kind of subsidy. But whichever way is found, it must be done in a way that avoids harm to the financial health of Eskom."

The Eskom officials said that because electricity use outpaced the supply of power, the country would face power outages and load shedding for the next five to seven years.

A 20-year-long construction plan will restore balance, but it is estimated to cost about R1,3trillion. - I-Net Bridge

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