Ted Blom: NERSA’s Eskom R9bn Tariff Increase Rulings Not Fair to Public

Energy analyst Ted Blom delves into the national regulator’s ongoing tariff reconstruction and provides some historic context.

In his SONA speech, President Cyril Ramaphosa said improving Eskom’s financial position, managing its debt and reducing its dependence on the fiscus would require a review of the tariff path.

National Energy Regulator of South Africa’s (NERSA) latest rulings made on 7 February 2021 are not fair to the public, even though it was bound by Court rulings where it did not properly defend its previous rulings.

The rationale behind my opinion is that the years covered by the rulings (2014-2019) are the years where it is public knowledge that Eskom was grossly corrupted by billions of rands, yet to be identified by the Zondo commission, and previously identified by then Public Protector Thuli Madonsela.

Time and again Eskom’s then head of Tariffs, and now CFO, promised NERSA that they will reduce tariffs by the “identified corruption amount”. This story was later changed to the amount “judged by a Court of Law”, and still later to “the amount that Eskom recoups”.

Thus the public is funding the working capital for the corruption and poor management by Eskom staff, of which most of the current Finance Division staff have been part of for at least 10 years. I refuse to believe that all the Chartered Accountants at Eskom over this period were oblivious of the deep corruption, and if they were oblivious, they are not worthy of the qualification.

Eskom tariff structure for electricity needs full forensic review going back at least two decades

By not conducting a full forensic review from the first noises of corruption in 2006, I believe NERSA is not fulfilling its mandated role as is expected by the public.

Accordingly, the down-beaten public will have to cough up another 5% on top of all the other increases the still corrupted Eskom has already been awarded.

Had all the facts been placed before the court in a competent manner, I believe a different outcome would have been reached. Had Eskom’s finance staff been more diligent, we should never have had to face over 500% tariff increases since 2007. Even the latest Auditor General has found billions of wasteful and irregular expenditure – including billions in 2020 under the “new leadership”.

The biggest corrupted elephant in the room has yet to be discovered by the Zondo Commission – viz, the corrupted “NON-Tender” for Kusile, which now stands at over R250bn.

None of this expenditure is regular because there was no tender for Kusile. The Auditor-General and the Zondo Commision still need to be alerted to this, and of course, nobody at Eskom is blowing the whistle.

Conspiracy? You decide.

Ted Blom will be a panelist on a webinar discussing the question of coal in the energy sector on 23 February. Hit the register button to engage with him on the future of coal mining and power stations.

This article was originally published on ESI Africa and is republished with permission with minor editorial changes.