South Africa: Cabinet Dashes Eskom’s Hope of Extra 53 % Hike

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.

AllAfrica