HomeIndustry SectorsFinance and PolicyFurther electricity tariff hikes unlikely

Further electricity tariff hikes unlikely

Further electricity
tariff hikes unlikely
Cape Town, South Africa — ESI-AFRICA.COM — 23 March 2011 – Consumers are unlikely to face any further electricity tariff hikes in order to recover an estimated R30 billion needed to upgrade the country’s distribution infrastructure, according to the Energy Department.

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clean energy Ompi Aphane said here that the department had four potential ways to fund a desperately-needed overhaul of outdated supply networks.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

Reports after a briefing by Energy Minister Dipuo Peters to parliament’s portfolio committee that the department was mulling imposing a levy that could send tariffs soaring beyond the annual 25% hike, were therefore misleading, Aphane added. “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,” he said.

Any tariff increase to recover the money would be minimal and would not affect the poorest, who are already shielded from the full impact of the annual 25% increases over three years that came into effect in 2010.