JOHANNESBURG, May (ANA) - The South African mining industry on Tuesday proposed that Eskom must take a variety of measures, including selling off some assets, to boost its balance sheet before increasing electricity tariffs.
This comes as the Chamber of Mines said that it opposes Eskom's application for a three percent annual tariff increase to recover losses on its Regulatory Clearing Account (RCA), arguing that it would have a severely negative impact on other sectors that depend on the mining sector.
Eskom has asked Nersa to grant it an additional three percent annual increase for the years 2020-2022 to help recoup losses on its RCA, and then to recover the balance over five years.
If the application is granted, the Chamber said that the R66.6 billion increase which will be passed onto consumers will result in mine closures and will have a severely negative impact on other sectors that depend on the mining sector.
The Chamber said that it recommends that Nersa does not pass the RCA onto customers but rather that the shareholder is tasked with dealing with the continuing inefficiencies at Eskom.
The Chamber also requested that government consider the sale of some of its stake within Eskom as the shareholder cannot afford to bail out the embattled power utility.
"Eskom must rework its business plan to reduce its fixed and variable costs, while growing sales which will reduce the electricity tariff," the Chamber said.
The mining industry wants Eskom to reduce its spare capacity from 35 percent to an industry acceptable capacity of 15 percent, saying this can be achieved by mothballing or putting some of the older power stations on cold storage.
The Chamber recommended to Eskom to restructure their organisation to be in line with the sales volumes and revenue generated to avoid extreme tariff increases.
"Eskom must rework its business plan to reduce its fixed and variable costs, while growing sales which will reduce the electricity tariff," the Chamber said.
In January, Nersa said Eskom had made three RCA applications to further increase tariffs in order to recover R66.6 billion lost between 2014 and 2017.
At the last hearing in Midrand on Monday, Eskom's acting chief financial Calib Cassim said the utility had made its proposal based on its financial situation.
The energy regulator has been holding public hearings on the matter. Nersa is expected to make a decision on the RCA applications before the end of June.
- African News Agency (ANA)
