'users must pay'

Marcia Klein

Marcia Klein

Eskom has asked the National Energy Regulator (Nersa) to grant a flexible pricing model so that increases in its costs can be immediately passed on to the consumer.

Finance director Bongani Ngwababa confirmed to Nersa that if, for example, the price of coal increased by 30percent, the price of electricity would too.

He said, however, that this would be a "prudent" increase, based on independent data.

Presenting the final arguments to Nersa after three days of public hearings into its application for an 100percent price increase over two years, Eskom chief executive Jacob Maroga refused to answer a Nersa question on whether Eskom was looking at making a gesture to South Africans because of the crisis.

He said the underlying assumption was that Eskom was guilty. The question, he said, should be "how does this country make the gesture, not how do I make the gesture".

He once again affirmed Eskom's requirement that tariffs be hiked, that government inject funding and that it would embark on "massive borrowing, local and international".

He said Eskom's use of short-term coal contracts had risen sharply, and that the transport costs were sometimes higher than the cost of coal itself.

Part of the reason why Eskom is relying more and more on short-term contracts is that the utility does not anticipate it will have such a restrained reserve margin in the long-term. Maroga said Eskom could not enter into long-term contracts which assumed the situation would continue for the long-term.

Lillibeth Moolman, chairman of the South African National Consumer Union, said it was government's responsibility to provide affordable electricity.

She said households paid more than Eskom's other users, and consumers should stop subsidising neighbouring states, industrial users and mines. She called for tariffs to be equalised among Eskom's different users.

Tebogo Khaas, president of the SA SMME Forum said load shedding had a profound impact on small business and there were no township businesses with generators. He called for South Africa to mothball its smelters and then look at ways of providing electricity capacity for the smelters.

Ebrahim Timol, who has a solar power company, said: "There is no need to hike electricity rate. It was announced by Mr Hugh McGibbon, Eskom's MD, during a secret meeting that Eskom made R2,39billion profit in 2007-08."