Eskom to ask for rates increase

SOUTH Africans must brace themselves for another hike in electricity rates later this year after the recent 30percent increase.

SOUTH Africans must brace themselves for another hike in electricity rates later this year after the recent 30percent increase.

It is believed that Eskom will later this year ask the National Electricity Regulator of South Africa (Nersa) to approve a further 40percent increase in electricity rates.

Public Enterprises Minister Barbara Hogan yesterday told Parliament that South Africa could no longer afford to provide cheap electricity to its citizens.

"It is no longer viable for us to provide cheap electricity," she said.

Eskom chief executive Jacob Maroga told Parliament that Eskom was R9,7billion in debt and was another R80billion short for its R385billion electricity-producing expansion programme.

He said some of the debt was the result of buying emergency coal supplies through expensive five-year contracts and from trucking the coal over long distances to power stations.

Maroga pointed out that a major portion of the debt came from 15-year contracts between Eskom and the aluminium smelters, who pay the utility at fixed rates related to the price of aluminium.

"Aluminum prices experienced their biggest slump last year, leaving Eskom with billions less income from the smelters than it bargained for," Maroga said.

Opposition MPs lashed out at Maroga, accusing him of bad planning.

"It would be much better for him to give up his bonus and salary increase." DA MP Pieter van Dalen said.

"Then the people of the country would take him seriously, instead of his coming here and saying they are going to increase the price of electricity while he earns R5million a year."

Eskom's annual report shows that Maroga earned R3,914million last year, which was increased to R4,960million this financial year.

Eskom chairperson Bobby Godsell said the report was misleading because Maroga was appointed on a salary that was significantly below the average for a chief executive at the utility.

"His salary had to be adjusted to get it to a chief executive's level, and if you want to argue about that, argue whether R5million is all right for a CEO or not. They should be well paid."

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