S.Africa could see a temporary increase in electricity levy - CNBC Africa

S.Africa could see a temporary increase in electricity levy

Southern Africa

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South African Finance Minister, Nhlanhla Nene has proposed a temporary increase in the electricity levy from 3.5c/kWh to 5.5c/kWh.

This is in an attempt to assist in demand management, he told Parliament on Wednesday during the 2015 Budget Review.

“I am proposing a number of tax measures to promote energy efficiency, which will be discussed further with industry, the electricity regulator, Eskom and other interested parties,” Nene said.

“This additional 2c/kWh will be withdrawn when the electricity shortage is over.”

According to the review, the additional revenue will be used to fund the broadening of the scope of the energy-efficiency savings tax incentive to include co-generation and an increase in the amount available for the incentive.

It was introduced in November 2013 to complement the proposed carbon tax and encourages firms to support a greener economy. Businesses can claim deductions based on energy saved.

Nene proposed an increase in the energy-efficiency savings incentive from 45 c/kWh to 95 c/kWh, together with its extension to cogeneration projects.

Other measures under consideration include enhancing the accelerated depreciation for solar photovoltaic renewable energy.

“In the absence of a carbon tax, the electricity levy serves both to promote energy efficiency and encourage lower greenhouse gas emissions,” he said.

“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.”

Nene indicated that a draft carbon tax bill will be introduced later this year for a further round of public consultations.

“To ensure that the burden is fairly distributed, steps will be taken to ensure that the electricity levy applies to all users, especially energy-intensive users, while ensuring that there are no double-payments.”