Eskom says can function with lower tariff hike

2012-03-09 22:01

Pretoria - Power utility Eskom is in a healthy enough financial and operational position to function on the 16% average tariff increase announced by the National Energy Regulator of SA (Nersa), it said on Friday.

The utility's performance would not be crippled by lower revenue in 2012, Eskom CEO Brian Dames said in Pretoria.

Eskom had initially asked for a 25.9% increase, but this was cut by 9.9% because of reduced sales volumes.

"We have had price increases greater than 25% for the past four years which has allowed us to build the reserves and to put together a fully funded expansion plan," said Dames.

He assured South Africans that the cut "would not jeopardise the objective of keeping the lights on" together with scheduled expansion projects.

Dames said Eskom supported the call by President Jacob Zuma for South Africa to have a national pact bringing together business, labour, municipalities and all communities in energy saving.

"We need to introduce more efficient energy usage, reducing electricity demand while improving the overall economic performance," he said.

The group's chief financial officer Paul O'Flaherty said Eskom was now operating in an improved funding environment.

"Most of the funding plan has been secured. The landscape has changed and Eskom's access to debt markets has improved," he said.

Slower capital expenditure had significantly reduced Eskom's borrowing requirement, interest payments and capital repayments, said O'Flaherty.

The new electricity tariff comes into effect from April 1.

The local authority tariff will increase by 13.5% with effect from July 1.

The non local authority tariff increases by 15.9%, with urban tariffs going up 16.7% and rural tariffs by 15.7%.

The residential inclining block tariff goes up 11.1%.

Nersa said the municipal tariff guideline increase was 11.03%.

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