Eskom told to prove need for price hike

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

ESKOM has to go back to the draw­ing board af­ter the Na­tional En­ergy Reg­u­la­tor of South Africa (Nersa) re­jected its “se­crecy ap­pli­ca­tion” and gave it un­til the end of Au­gust to pro­vide in­for­ma­tion, in­clud­ing its coal vol­umes as part of its ap­pli­ca­tion for a tar­iff hike.

Busi­ness wel­comed Nersa’s de­ci­sion, say­ing on Fri­day that grant­ing the ap­pli­ca­tion would have seen the state-owned power util­ity raise elec­tric­ity tar­iffs with­out pro­vid­ing the nec­es­sary mo­ti­va­tion.

“The ap­pli­ca­tion was not in line with good gov­er­nance and ac­count­abil­ity,” Busi­ness Unity South Africa (Busa) chief ex­ec­u­tive Tanya Co­hen said.

Busa had op­posed the ap­pli­ca­tion as it be­lieved Nersa’s de­ci­sion needed to be in line with its duty to bal­ance the in­ter­ests of all stake­hold­ers.

It said elec­tric­ity price in­creases should be de­ter­mined with full dis­clo­sure of rel­e­vant in­for­ma­tion by Eskom.

The Or­gan­i­sa­tion Un­do­ing Tax Abuse (Outa), which op­posed the ap­pli­ca­tion in May, said on Fri­day that Eskom was re­luc­tant to dis­play this in­for­ma­tion in de­tail, over the past decade, as it would show how in­ef­fi­ciently it had been man­aged and how ex­or­bi­tant its op­er­at­ing costs had be­come.

“We be­lieve this added level of trans­parency will high­light Eskom’s trans­gres­sions… such as ex­pen­sive Gupta coal con­tracts,” Outa’s port­fo­lio di­rec­tor of en­ergy, Ted Blom said.

Eskom said pre­vi­ously it could not meet cer­tain re­quire­ments for its ap­pli­ca­tion for a 19.9 per­cent tar­iff hike in 2018/2019. It ap­plied to Nersa for per­mis­sion to con­duct as­pects of the multi-year price de­ter­mi­na­tion pro­ceed­ings (MYPD) in se­cret, say­ing it was un­able to dis­ag­gre­gate coal vol­umes and wa­ter costs. On re­search and de­vel­op­ment, it asked to be ex­empted from con­duct­ing con­sul­ta­tions.

Eskom also re­quested that it be ex­empted from pro­vid­ing cash-flow state­ments in terms of the re­quire­ments of the Min­i­mum In­for­ma­tion Re­quire­ments for Tar­iff Ap­pli­ca­tion (Mirta).

It said it would not be able to pro­vide reg­u­lated and non-reg­u­lated in­dus­tries as well as pro­vide a 10-year sales fore­cast.

Nersa said early on Fri­day that fol­low­ing a meet­ing on July 27, it had de­cided that “no con­do­na­tion would be granted for Eskom’s re­quest to de­vi­ate from meet­ing cer­tain re­quire­ments of the MYPD and Mirta.”

Nersa said it was im­por­tant to take the process through a con­sul­ta­tion pro­ce­dure to com­ply with fair­ness prin­ci­ples.

“Notices, com­ments and pub­lic hear­ings can be an ef­fi­cient and ad­e­quate process of con­sid­er­ing the ur­gency of the mat­ter,” it said.

Eskom spokesper­son Khulu Phasiwe said the com­pany was study­ing Nersa’s de­ci­sion.

Eskom placed its chief fi­nan­cial of­fi­cer, Anoj Singh, on spe­cial leave amid a pend­ing in­ves­ti­ga­tion af­ter he said he signed a R1.6 bil­lion guar­an­tee to Absa Bank for Gupta linked Tegeta Ex­plo­ration and Re­sources to buy the Op­ti­mum mine.

Nic Roodt, a part­ner at law firm Fasken Martineau, warned last month that if Nersa al­lowed Eskom to ex­clude cer­tain in­for­ma­tion from the pub­lic realm, it would be rea­son­able for the pub­lic to as­sume that Eskom was try­ing to cover up in­ef­fi­cien­cies and off­load costs on to the con­sumer – par­tic­u­larly when con­sid­er­ing the rev­e­la­tions in the re­cent Gupta e-mails.

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