Eskom should scrap tariff increase request - Ted Blom
As National Energy Regulator of South Africa (Nersa) prepares to hold public hearings on Eskom's request for a multi-year 45% tariff increase, energy expert Ted Blom believes the utility should cancel the application until a full forensic audit has been completed.
The three-year 45% request by Eskom comes after Nersa approved a 12% increase for the next financial year.
The situation at the cash-strapped utility Eskom is being probed by the Boston Consulting Group, as well as its board and a presidential task team.
"Though appointed 12 months ago, they have been unable to carve out a credible turnaround plan, despite the use of expensive outside consultants," Blom says.
President Cyril Ramaphosa recently appointed a team of eight experts to assess Eskom's business model and future strategy.
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"Should these people do their job properly then the results should very well be reducing costs drastically, should be stopping the corruption drastically, should sort out coal procurement drastically and if it does all these things, Eskom doesn't need a tariff increase," Blom says.
Blom adds that its premature for Eskom to request a 60% tariff increase over three years.
"On a business as usual basis, when we all know that a major intervention will have to happen at Eskom urgently if they are survive past March this year," Blom says.
Blom says coal procurement and the headcount at the power utility are also issues that need to be solved urgently.
"Although Eskom has acknowledged a bloated headcount (estimates are by 35 000, including ghost workers), Nersa continues to ignore the gross inefficiencies and has, since 2008, granted tariff increases of some 500% above the corresponding inflation rate," says Blom.
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