The threefold crisis: Eskom, power, and tariffs

By Staff Writer
The Democratic Alliance (DA) believes that the carbon tax, which is set to be implemented in 2016, will increase the costs of electricity, and is an ill-timed intervention.

“Ultimately the carbon tax will be laundered onto consumers, as the carbon tax will have a huge impact on Eskom, and Eskom is currently in a dire situation. So we are looking at three crisis: electricity generation crisis, the tariff crisis, and we are looking at the Eskom crisis,” said David Ross, the DA shadow deputy minister of finance.

Ross added that the DA believes that another tax imposed on the consumers of South Africa is unacceptable, and that it will lead to electricity increases.

“This will place a further burden on South Africans who continue to fund a government that mismanages the public purse at every turn,” said the DA in a statement.

Ross said that the DA will fight any further tax increases.
“The public has had enough of tax increases, and of unaffordable electricity, and I think that the public needs to be protected in this regard,” said Ross.

Budget speech

However, Finance Minsiter, Nhlanhla Nene claimed in the budget speech earlier this year, that the introduction of the carbon tax will result in an electricity level decrease.

“The introduction of a carbon tax in 2016 will provide an additional tool to deal more sustainably with the current electricity shortage, while lowering the electricity levy,” said Nene.

The DA highlighted that the proposed 12.69% increase for direct customers, and 14.25% for municipalities is far above the 8% annual tariff increase agreed to by the National Energy Regulator of South Africa (Nersa).

A draft bill of the carbon tax will be made available for public comment within the next two months.

Green economy

“Of course we support South Africa’s commitment to reduce greenhouse gas emissions, and I think that it is important that we stick to our commitment,” said Ross.

The implementation of the green tax also comes as the German Development Bank (GDB) has loaned South Africa R4 billion to build more renewable energy plants.

The money will be used to build the Kiwano solar thermal power station in Upington, Northern Cape and the Ingula Pumped Storage Scheme in Braamhoek, KwaZulu-Natal.

“Government welcomes the R4 billion loan, which has been secured at favourable terms and a significantly lower interest rate as a result the sovereign guarantee that it has made available for Eskom,” said acting director general at the Government Communication and Information System (GCIS), Donald Liphoko.

Ross welcomed the move and said: “That is excellent. That is a step in the right direction.”

Ross added that this would also have a positive effect on the cost of electricity for the consumer, as the production costs of solar have come down.

Eskom’s money woes

Eskom is also set to receive a R23 billion cash injection, as highlighted by Nene in the budget speech.

However, there has been no more information about where the money will be coming from, or what assets will be sold in order to generate the cash, said Ross.

“Well, that is [R23 billion cash injection] still a very grey area. The minister did not give an indication of where that came from. He just said that it would consist of three instalments. I believe that the first one is in June [2015], then another one in February [2016] and then another three billion,” said Ross.

Ross went on to explain that Eskom’s cash reserves in 2012 were R40 billion, and now are completely depleted.

“I have had several interactions with the regulator [Nersa], and the information that I get from the regulator clearly indicates that Eskom is in crisis,” said Ross.

If you have a question for Eskom, send it to us at info@justmoney.co.za. If it’s a good question, we’ll send it to Eskom too.
 

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