|
|
South Africa: Cabinet Dashes Eskom's Hope of Extra 53 Percent Hike
 |
 |
|||||||||
|
||||||||||
|
|
|||||||||
|
||||||||||
Business Day (Johannesburg)
16 May 2008
Posted to the web 16 May 2008
Linda Ensor
Cape Town
On the eve of a top-level summit today called to deal with SA's electricity crisis, power utility Eskom appears to have lost support even from the government in its plea for an immediate and drastic 53% hike in electricity tariffs.
Instead, the government has shifted towards supporting a cash injection for the utility to permit five years of smaller, incremental hikes.
The emerging consensus between the government, business, labour and the African National Congress and its allies -- that a sudden price shock would deliver irreparable harm to the economy and add significantly to inflation and interest rates -- crystallises a groundswell of opposition to Eskom's perceived high-handedness.
Though the final decision on the price hikes ultimately rests with the National Energy Regulator of SA (Nersa), the body is unlikely to ignore the combined weight of all the stakeholders. Eskom could submit a revised tariff rise application.
This latest reversal for Eskom is likely to deliver a blow to the credibility of its management and its funding and communication strategies. This after Eskom plunged business into darkness and precipitated a large-scale shutdown in mining earlier this year, harming SA's attractiveness to foreign investors, and its reputation for cheap and reliable power.
Furthermore, having only recently introduced load shedding with much fanfare, Eskom suddenly abandoned the practice, apparently because this was overstraining dated infrastructure.
In March Eskom delivered its most potent shock of all, saying it would go back to Nersa to apply for a second increase, of 53%, to augment the 14,2% it had already been granted.
Its request unleashed a wave of angry opposition from several quarters, and even from Reserve Bank G overnor Tito Mboweni.
Yesterday, government spokesman Themba Maseko indicated there had been a change of heart on the issue, with the emerging consensus being that Eskom should receive an injection of funds from the state.
This would allow it to introduce its price hikes over five years instead of the three years first envisaged, and obviate the need for an immediate and drastic 53% increase.
Eskom has warned it could suffer a loss of up to R10bn in this financial year if Nersa turned down its request.
The consensus has been thrashed out during extensive discussions among stakeholders ahead of the national electricity summit in Sandton, where it is likely to be formally adopted. It is thought to have been endorsed by the presidential working group.
The summit will also learn about the state's new electricity pricing policy adopted by the cabinet. Maseko said it would strive to ensure the electricity value chain created "an investor friendly pricing structure that promotes efficient cost recovery measures and a reasonable return on investment".
|
The cabinet also decided to set up a p rogramme m anagement o ffice under the minerals and energy department to co-ordinate efforts to deal with the electricity emergency. It would comprise seconded government officials and industry experts.
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
