SA electricity supply 'at risk'

2009-06-09 14:15

Pretoria - The country’s electricity supply would be at risk if Eskom did not receive its 34% tariff hike, its chief executive Jacob Maroga said on Tuesday.

"If we do not get the right amount of increase this year... it means we have more risk in terms of security of supply," he told the National Energy Regulator of South Africa at the CSIR Convention Centre in Pretoria.

Maroga was making closing comments during Nersa’s two-day public hearings into Eskom’s application for a 34% interim price increase.

"We still have the process to go through to deal with the totality of what we require...," he said, adding that any immediate determination on an increase could not solve the parastatal's long-term financial uncertainty.

During the hearings, Eskom was accused of flouting the Municipal Finances Act by submitting its application late, and failing to provide sufficient information on why the steep increase was required.

Maroga said a lot of consultation and dialogue was required before Eskom could make a determination on the cash it needed.

Interim tariff hike

This process had not yet been finalised, hence the application for the interim tariff hike.

"In my view, as much as you need to respect deadlines, with the substantial amount of money we are talking about and the implications for the country we needed dialogue," he said.

The parastatal needed to "engage the shareholder", the state. It also needed to assess its ability to obtain funds through borrowing and whether it would be able to repay this funding.

"The emerging conclusion was that we put in an interim [application] to create space to deal with the funding model. That’s why we were not able to keep to deadlines," he said.

On the scant information provided to motivate the tariff hike, Maroga said he believed the application was sufficient.

However, he explained that the application was interim and that a more detailed explanation would be forthcoming in Eskom’s multi-year price determination.

- SAPA