Cape Times

Eskom told to prove need for price hike

- 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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