Eskom warns of huge price hik e

GOING UP: Eskom says it needs a hike in tariffs to build new plants. Pic. Mark Wessels. cicra 2008.  © ST.
GOING UP: Eskom says it needs a hike in tariffs to build new plants. Pic. Mark Wessels. cicra 2008. © ST.

ESKOM might need to increase electricity tariffs by 90percent this year if it fails to source money elsewhere to fund its power expansion programme, the power regulator said.

ESKOM might need to increase electricity tariffs by 90percent this year if it fails to source money elsewhere to fund its power expansion programme, the power regulator said.

Eskom applied for a 34percent increase earlier this month, but said it might have to ask for more if it failed to get all the funding required for this year's part of its R385billion five-year expansion programme.

Thembani Bukula, who is responsible for electricity at the National Energy Regulator of South Africa, said Eskom planned to spend R87billion this year alone but had only managed to secure R60billion from the government, the market and its own balance sheet.

"If that other R27billion were to be funded through the tariffs, it would require an increase of 90percent," he said.

Eskom, which provides 95percent of the country's power, has said it needed a significant rise in tariffs to build new plants meant to fill a supply shortfall.

Bukula said tariffs usually were not meant to fund expansion programmes, but rather to help make a utility's balance sheet healthy enough to allow it to borrow money.

"The options are to look at other sources of funding, to change the profile of the spend and suffer the consequences in a lower reserve margin ... or to find an equity partner to help fund the programme," he said. - Reuters

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