Sunday, 2nd April 2023
Breaking News:

South Africa’s power supplier defends price hike amid record blackouts

13 January 2023   |   10:48 am
South Africa's debt-laden power utility Eskom on Friday defended as a "tough decision" a steep tariff increase despite record power cuts that have angered the nation.

A Muslim man reads the Quran in a mosque and uses a mobile phone as a light during one of frequent power outages, called load shedding, as South Africa’s struggling power utility Eskom implements regular power cuts because of ageing coal-fired power stations, in Cape Town, South Africa, January 11, 2023. REUTERS/Esa Alexander

South Africa’s debt-laden power utility Eskom on Friday defended as a “tough decision” a steep tariff increase despite record power cuts that have angered the nation.

The energy regulator on Thursday allowed the state-owned firm, struggling with a 400-billion-rand ($23.3 billion) debt, to raise prices by 18.65 percent.

Eskom, which had applied for a 32 percent increase, said it appreciated the regulator’s “tough decision”, adding that it “will positively contribute from a financial and sustainability point of view”.

The hike takes effect in April.

Analysts say the firm’s troubles are the result of years of mismanagement, disrepair and graft.

The company, which generates more than 90 percent of South Africa’s energy, has had more than a dozen CEOs in the past 15 years.

“This will be a devastating blow to workers and businesses struggling to survive in an economy that is still reeling from Covid-19 lockdowns and rampant inflation,” the leading trade union federation COSATU said.

Environmental group Greenpeace Africa said South Africans would have to make trade-offs between food and energy needs, while the opposition Democratic Alliance (DA) party called the increase a “sanctioned daylight robbery”.

“(It) is unfair, unjust and cruel because it is asking consumers to pay more for electricity that they don’t have,” said DA lawmaker Ghaleb Cachalia.

Scheduled blackouts have burdened South Africa for years, with Eskom failing to keep pace with demand and maintain its ageing coal power infrastructure.

But the outages reached new extremes over the past 12 months, with the firm blaming sabotage and crime.

This week, it said it would implement blackouts of up to nearly 12 hours a day until further notice after a string of generators broke down.

The government has pledged to take on half of Eskom’s debt and last month said it had begun deploying the military to protect electricity plants.

Eskom’s outgoing CEO, who handed in his resignation in December, cited a lack of political support and corruption as some of the obstacles to turning around the utility.

In this article