Electricity upgrade will not send price soaring: official

2011-03-23 12:57

Consumers were unlikely to face further electricity tariff hikes to recover an estimated R30 billion needed to upgrade distribution infrastructure, the energy department said today.

Deputy director general for electricity, nuclear and clean energy, Ompi Aphane said the department had four potential ways to fund a desperately needed overhaul of outdated supply networks.

These were a national levy or municipal surcharges, private partnerships, development funding, potentially from the World Bank, and tariff adjustments.

“We are looking at all these options, and the World Bank is keen to facilitate any of them,” he said, adding that the eventual financial model for recovering costs could include all four options.

Aphane stressed that only the finance ministry had the power to impose a levy.

The issue had been raised with Treasury officials, but he said they favoured development funding as way of recovering the cost.

Reports following a briefing by Energy Minister Dipuo Peters to Parliament’s portfolio committee yesterday that the department was mulling imposing a levy that could send tariffs soaring beyond the yearly 25% hike, were therefore misleading, Aphane said.

“Let’s be clear – there is no levy. That’s a mistake.”

Aphane said ageing infrastructure was a pressing concern. Failing to attend to it would undermine Eskom’s massive R385 billion build programme to secure electricity supply.

“It is urgent. It is a focus of this financial year. If we don’t spend the R30 billion, we might as well not spend the trillion rand.”

Any increase in tariff to recover the money would be minimal, and would not affect the poorest of the poor, who are already shielded from the full effect of the 25% increases over three years that came into effect last year.

“We can structure any increase so that certain segments pay more than others.”

He added that fears an eventual price increase to rehabilitate infrastructure would drive up inflation, needed to be weighed against the dire consequences of power blackouts on the economy.

“As for inflation, inflationary pressures are definitely going to materialise, but rather that than no power.”

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