JOHANNESBURG (Reuters) – South Africa’s cash-strapped utility Eskom will seek power price increases of nearly 20 percent when it approaches the electricity regulator at end of the month, the BusinessDay newspaper reported on Tuesday citing confidential documents.
Eskom, the sole power supplier to Africa’s most developed economy, was granted a 2.2 percent tariff increase by the National Energy Regulator for the 2017/18 financial year, down from 9.4 percent the previous year.
BusinessDay said a draft application for 2018/19 sent to the National Treasury and municipalities showed Eskom intended to apply for an average increase of 19.9 percent.
Eskom did not respond to phone calls, email and text messages seeking immediate comment.
Eskom, heavily reliant on a Treasury guarantee of nearly 350 billion rand ($27 billion) to complete its behind-schedule building of two coal-fired plants while mothballing other sites, said the steep hike was necessary to plug its revenue gap, BusinessDay reported.
A large electricity tariff hike would bolster consumer inflation, which the central bank has struggled to keep below the upper end of its 3-6 percent target, resulting in interest rate increases of 200 basis points over the last 3 years.
Eskom is also engulfed in a governance crisis after a decision by its board in April to reinstate Brian Molefe as chief executive was vetoed by government.
Molefe stepped down in November after he was implicated in a report by the Public Protector, a constitutionally mandated anti-corruption watchdog, for allegedly granting lucrative contracts to the Gupta business family.
Molefe and the Gupta family have denied any wrongdoing.
(Reporting by Mfuneko Toyana; editing by Joe Brock and Jason Neely)