Business Unity South Africa (BUSA) has welcomed the decision to grant Eskom a reduced tariff increase of 16%, down from the original 25.9% approved in the Multi-Year Price Determination (MYPD 2).
The National Energy Regulator of South Africa (Nersa) on Friday approved the reduced tariff, which is for the period 1 April 2012 to 31 March 2013.
“The announcement comes at a time when BUSA had become increasingly concerned about the impact of increasing electricity prices on the cost of doing businesses in South Africa. It also comes at a welcome time to assist in reducing the overall impact of administered prices on the inflation basket, and the knock-on effect on interest rates,” it said.
Public Enterprises Minister Malusi Gigaba said the lower tariff was a result of combined efforts by government and Eskom to reduce the impact of higher electricity tariffs on the consumer as well as the economy without compromising the utility’s ability to keep the lights on and ensuring its long-term financial sustainability.
Earlier this month, the regulator received Eskom’s application for a review of its tariffs.
“The reductions will have immediate benefits for businesses and households, and followed a request from President Zuma that Eskom investigate ways to reduce price increases over the next few years, in support of economic growth and job creation. The initiative by government regarding its allowed return on assets represents a huge investment in the economy,” said Gigaba.
The reduced tariff would not compromise the utility’s viability nor would it affect its ability to complete building of new power stations on time.
“The decision to propose lower tariffs this year is recognition that there have been significant changes in the economic landscape and in our own operating environment since 2009, when we applied for the MYPD2 increases,” explained Eskom chief executive Brian Dames. – BuaNews