CityPress - - Business - YOLANDI GROE­NEWALD yolandi.groe­newald@city­press.co.za

outh Africans are caught be­tween a rock and a hard place. Do they opt for more ex­pen­sive elec­tric­ity or less elec­tric­ity? And if South Africa were to grant Eskom more money, are there any guar­an­tees our state util­ity will mirac­u­lously be able to do its job prop­erly?

These were among the ques­tions South Africans were left with at this week’s public hear­ings into the util­ity’s re­quest for a 24.78% hike of its main do­mes­tic tar­iff.

Act­ing Eskom CEO Brian Molefe was not afraid to use some good old fear­mon­ger­ing.

“If South Africa is not pre­pared to cough up R15 bil­lion more for diesel, the cost of load shed­ding will be far higher than that,” he warned.

He and Thava Goven­der, Eskom group ex­ec­u­tive for gen­er­a­tion, warned South Africa more load shed­ding was on the cards if the in­crease was not granted.

It costs about R2.35 per kilo­watt-hour to gen­er­ate elec­tric­ity with diesel gen­er­a­tors, as op­posed to the 50c per kWh to gen­er­ate power in coal-fired power sta­tions.

Molefe said the in­crease was crit­i­cal to fund the ad­di­tional R15 bil­lion in rev­enue needed to avoid pro­longed load shed­ding. The ad­di­tional money would be used to pay for diesel for some gen­er­a­tors and buy elec­tric­ity from in­de­pen­dent power pro­duc­ers.

The diesel gen­er­a­tors will sup­ply the ad­di­tional power needed when coal-fired power sta­tions are shut down for main­te­nance.

The In­ter­na­tional Mon­e­tary Fund warned this week that se­vere elec­tric­ity short­ages had be­come the great­est ob­sta­cle to South Africa’s growth. Yet Eskom hoped to bring a to­tal of 3 700 megawatts in new ca­pac­ity online be­tween now and Septem­ber 2017.

The Na­tional Energy Reg­u­la­tor of SA (Nersa) con­vened the hear­ings af­ter Eskom ap­plied for a “se­lec­tive” re­open­ing of its third mul­ti­year price de­ter­mi­na­tion. If the tar­iff in­crease is granted, it would raise the tar­iff to a stag­ger­ing 24.78% from the 12.69% al­ready ap­proved. The ap­proved in­crease had been set for the first of next month.

Although Eskom was aim­ing for the 24.78% to be granted nearly im­me­di­ately, it be­came ap­par­ent in the hear­ings that any new in­crease could only come into ef­fect in July next year be­cause mu­nic­i­pal­i­ties would not be able to pass the in­crease on to their con­sumers. Molefe was not the least bit pleased about this.

The hear­ings came in the same week Par­lia­ment granted the state util­ity a R23 bil­lion cash in­jec­tion and ap­proved another bailout, with the con­ver­sion of a R60 bil­lion loan to eq­uity. Eskom found it­self with­out a sin­gle sup­porter at the hear­ings.

Energy ex­pert Chris Yel­land tore apart Eskom’s pre­sen­ta­tion, say­ing it was dis­hon­est.

“Un­bud­geted Eskom diesel costs are a di­rect re­sult of Eskom’s own fail­ings. There­fore, by no stretch of the imag­i­na­tion can the un­bud­geted diesel and [short-term power pur­chase pro­gramme] costs be con­sid­ered as ‘pru­dently and ef­fi­ciently in­curred’,” he said, adding that off­set costs from the Medupi and Kusile power sta­tions for not pro­duc­ing power had not been fac­tored into Eskom’s cal­cu­la­tions.

He also ar­gued that there were bet­ter al­ter­na­tives to burn­ing diesel gen­er­a­tors, such as power ships.

Pre­sen­ta­tion af­ter pre­sen­ta­tion slaugh­tered Eskom for its nerve in ask­ing for more money while strug­gling to keep South Africa’s lights on. Eskom’s bad man­age­ment was a con­stant theme at the hear­ings.

Al­most ev­ery speaker ar­gued that South Africa sim­ply could not af­ford another price in­crease.

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