Eskom says a tariff hike is necessary

POWER utility Eskom says the only way to stabilise its financial situation is through revenue generated by its customers. This week the utility shared insights behind its application for a 15 per cent price hike for three years under the fourth Multi-Year Price Determination (MYPD4) and Regulatory Clearing Account (RCA).

Eskom CEO Phakamani Hadebe said, “Eskom’s financial situation is unsustainable. This is illustrated by the targeted loss for the 2019 financial year resulting in over R15bn. This in itself will be a challenge due to the recent additional costs associated with trying to keep the system going. Restoring operational performance comes at a cost which must be funded and recovered through revenue requirements.”

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Hadebe said that Eskom understood that an increase in the tariff may be difficult at this time however he said it is necessary for Eskom.

“Not being granted a suitable increase could lead to an unsustainable financial position for Eskom, which would put the country in an even more dire economic condition,” he said.

The utility’s Chief Financial Officer Calib Cassim said it’s also important to note that the application is coming off a 2,2 per cent and 5,23 per cent price adjustments respectively in the previous years.

“Let us remember that debt providers, rating agencies, auditors and other stakeholders will eagerly await this crucial decision,” added Cassim

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