South africa moots policy interventions to provide relief from Eskom hike

South Africa electricity and energy minister Kgosientsho Ramokgopa, who is Eskom’s shareholder minister, has reiterated his opposition to the utility receiving a 36.15% tariff hike next year.

He also says various policy interventions are being considered to reduce the increase.

Speaking at a briefing in Pretoria that coincided with the National Energy Regulator of South Africa’s (Nersa’s) nationwide public hearings into Eskom’s sixth multiyear price determination (MYPD6) application, Ramokgopa expressed confidence that the hike would be “significantly” lower than what Eskom was requesting.

Eskom is requesting allowable revenue of R446 billion in 2025/26, R495 billion in 2026/27 and R536 billion in 2027/28 that, if approved, would result in tariff hikes of 36.15%, 11.91% and 9.1% on 1 April of each of the three years covered by the MYPD6.

Underlining that reducing the cost of living and economic growth were both apex priorities of the government of national unity, Ramokgopa said the affordability of electricity had come into sharp focus now that electricity supply had been stabilised following an intense period of load-shedding.

He also confirmed that he was currently considering various policy interventions to provide households and industry with “relief” from the hikes, without undermining Eskom’s financial sustainability.

Specific reference was made to a condition imposed on Eskom by the national treasury to migrate to cost-reflective tariffs when it approved a R250-billion debt-relief package for the debt-laden state-owned entity in 2023.

Ramokgopa suggested Eskom could be given a longer period to reach its goal of achieving a return on assets of 10%, which would help smooth the pace at which tariffs increased.

He refused to be drawn on the other policy interventions being considered, saying only that he would be seeking Cabinet approval for the interventions ahead of Nersa’s 20 December determination so that the regulator was in a position to factor them into its final decision.

“We will be fashioning interventions to ensure that we provide relief,” Ramokgopa said, indicating that any policy interventions carrying tax implications would have to be approved by Cabinet and announced by the finance minister.

– Mining Weekly