BONGANI FUZILE: Massive electricity price rises are on their way to save Eskom
'By 2019/20 financial year expect a 30% electricity hike, followed by 50% the following year and 30% the other year. This is a reality'
On Monday, Eskom announced that earnings before interest‚ tax‚ depreciation and amortisation (ebitda) increased from R38-billion to R45-billion while revenue was flat at R177-billion‚ with electricity sales up 0.9%.
A net loss of R2.3-billion compared poorly with last year’s profit of R900-million. The net finance cost grew by 61% to R23-billion.
This was linked to fewer costs being capitalised and a growth in borrowings. On the R19.6-billion irregular expenditure — increased from R3-billion in the previous financial year — Eskom said 60% of incidents related to administrative noncompliance‚ and noted that irregular spending was not necessarily fruitless and wasteful expenditure.
Eskom’s financial problems will hit already- under-strain South African consumers hard – even more so as those consumers are currently faced with escalating fuel hikes. So said analysts after the power utility announced its losses on Monday. In the next three financial years, they speculated, electricity hikes could go up by 110%. Energy analyst Ted Blom said electricity consumers should prepare for the worst. “By 2019/20 financial year expect a 30% electricity hike, followed by 50% the following year and 30% the other year. This is a reality. Eskom over the past 10 years has come out with a high tariff raising strategy which has enabled them to fleece the country’s economy of some R1.3-trillion,” said Blom.Another analyst, Somadoda Fikene, said the poor will suffer the most. “The poor are the most to be affected by this as Eskom will try to recoup their losses. We will see price hikes while at the same time they are failing to diagnose what their problem is,” said Fikeni. Bantu Ho...