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Tariff increase of 100% for some SADC countries?

Electricity tariffs. Light bulb.Tariff’s may need to increase by up to 100% in some SADC countries in order to attract investors, says Brain Sechotlho of the National Energy Regulator of South Africa.

“From the results of our assessment, it is clear that current prices are not sufficient to attract investments in much needed infrastructure,” he said.

Current tarifs do not provide a sufficiently enticing investment opportunity, as they are not providing a robust return on investment.

Sechotlho said that tariffs need to be at least US$0.13 per kilowatt hour – which means that some countries may have to increase tariffs by more than 100%.

The challenge, of course, is to keep tariffs low enough to enable electricity access to the poor, but at the same time, providing an attractive return on investment.

Sechotlho said that the path to cost reflective tariffs must be carefully planned to ensure that it encourages investment, while taking into account the economic impact on low income citizens.

Sechotlho was talking post an assessment of SADC tariffs.

“The RERA [Regional Electricity Regulators Association of Southern Africa] Economic Regulation Subcommittee has recently published the 2013 Electricity Tariff booklet. We are currently busy with the next publication which covers the year 2014. We are planning to publish it in the first quarter of 2016,” he said.

Cost reflective tariffs

According to Swaziland’s minister of natural resources and energy, Jabulile Mashwama, regulators need to balance the need for energy access against the issue of cost reflective tariffs.

“Considering cost reflective tariff[s] is important in order for the regulators to consider how the less privileged can access energy resources at an affordable tariff rate,” she said.

Elijah Sichone, RERA executive secretary.

Sable Dube, general manager of finance and administration at the Swaziland Energy Regulatory Authority commented further: “We are standing up in a dilemma as countries in SADC, the electricity must be accessed by the poor hence it should be affordable, but at the same time we need investors. However, we need to find a solution to balance the equation because electricity is the stimulus of the economy.”

However, RERA executive secretary, Elijah Sichone said “…we only have to be persuasive because these changes are not mandatory. RERA’s role is to nurture the energy market and to champion the independent power producer programme, that way we need to ensure that these suggestions are implemented.”