Nersa grants Eskom's tariff hike, but not 20%

Johannesburg - South Africa's  National Energy Regulator (Nersa) has declined Eskom request for a 20% hike, instead granting Eskom a 5.2% hike. 

The regulator is due to publish a document outlining the decision in the next couple of days, Nersa chair Jacob Modise said. The 5.23% tariff increase, announced by the regulator on Friday, is closely aligned with inflation in the country, as measured by the increase in South Africa's consumer price index (CPI).

The regulator conducted country-wide hearings at the end of November on whether the cash-strapped state utility should be granted a 19.9% hike. Eskom's struggle with liquidity also came to light during the same period. 

Eskom’s allowed revenue, as calculated by Nersa, will be R190 348bn for the 2018/19 financial year, which amounts to a 5.2% hike. 

Nersa received more than 23 000 submissions on the subject, with widespread opposition against the proposed hike. 

But despite the flood of opposition at the hearings, Eskom did not back down from its original request, emphasising that it was necessary to help keep it afloat. 

The decision will be a blow for Eskom as it attempts to fix its financial woes, but a boon for many struggling South Africans.

Eskom's reaction

Eskom spokesperson Khulu Phasiwe said the utility was disappointed with Nersa's decision. He said Eskom would await the regulator’s reasons for the decision as outlined in the document to be provided.

"This will provide insight into how this allowed revenue decision was made. The reasons for decision document will enable Eskom to make an assessment on the impact to the business and then make a decision on the way forward."

Last month Eskom's acting finance chief Calib Cassim made a desperate plea on the last day of the hearings, saying that a hike in line with CPI, as requested by countless organisations, simply was not sustainable and that Eskom needed the 19.9% to stay afloat.

“Eskom is not financially sustainable with a CPI price increase as this would imply an average price increase of 4%," he said. 

He said that South Africans would ultimately have to choose between a bailout and the tariff hike if it wanted the power utility to survive the coming storm.

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