Eskom Board To Deliberate On Gaping Tariff Hike Shortfall

  • The Eskom Board will deliberate further before deciding on how best to address their gaping shortfall.
  • The utility keenly awaits the reasons why NERSA has disallowed R102 billion of revenue over the MYPD4.

Eskom has noted the decision made by the National Energy Regulator of South Africa (NERSA) to approve tariff increases of 9.41%, 8.10% and 5.22% respectively for the next three years.

This excludes the approximate 4.4% already approved during 2018 for the Regulatory Clearing Account (RCA) recovery for the 2015 to 2017 financial years. On the RCA application for year 5 (2017/18) of MYPD 3, NERSA has approved an amount of R3.869bn.

Eskom has looked into cost efficiencies from its operations and the shareholder (National Treasury) has given support of R69 billion over the next three years. This is 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. The utility keenly awaits the reasons why NERSA has disallowed R102 billion of revenue over the MYPD4.

Calib Cassim, Eskom’s Chief Financial Officer says, “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.

Cassim adds “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.”

Author: Bryan Groenendaal

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