South African Energy Parastatal Eskom introduced a tariff increase of just under 14% in April 2019. According to the former head of the Council for Scientific and Industrial Research’s energy department, Tobias Bischof- Niemz, these electricity tariff increases have not been effective.
With a debt of R420 billion, Eskom is in financial trouble, often leading to the South African taxpayer being saddled with the bill.
There is no doubt that South Africans have been feeling the financial pinch since the unravelling of the state capture reports. With state-owned entities at the core of looting by corrupt officials, Eskom is no different.
Will Eskom be able to operate with their current tariff level?
Rolling blackouts as a result of load-shedding have been the mainstay of many conversations and news reports for months. As more businesses and households have been inconvenienced by these blackouts, Eskom has been scrambling to find ways to sustain its operations.
The tariff increases have been permitted by The National Energy Regulator of SA (Nersa.) This is provided that the costs incurred by Eskom have been from money spent efficiently.
Nersa has taken a more cautious approach to authorising tariff hikes by Eskom.
The reality is that the unbundling of Eskom will make it easier to assess legitimate costs. This enables proper regulation, to give cost-effective tariffs.
Smaller entities create transparency and accountability.
Without these measures, the South African taxpayer will have to bail the utility out.
The question of whether Eskom will be able to operate with their current tariff level or not is also a factor that is determined by how efficiently the parastatal manages the funds made available for operational purposes.