South Africa’s cash-strapped power utility Eskom will have to tap debt markets if the state-owned company fails to get the tariff increase it is seeking, the public enterprises minister was quoted as saying on Monday.
Eskom has asked the National Energy Regulator of South Africa (NERSA) to approve a 9.58 per cent price hike. This would bring the total increase this year to over 22 per cent after prices also rose in April.
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NERSA is expected to announce its decision on the request on Monday.
“If NERSA doesn’t give the increase then Eskom will have to re-examine its finances and go out and borrow,” Public Enterprises Minister Lynne Brown was quoted as saying in the Business Day newspaper.
Eskom, which imposes rolling blackouts on an almost daily basis due to inadequate electricity capacity, is facing a funding gap to 2018 of up to 200 billion rand ($16 billion).
The government has pledged to provide Eskom with a 23 billion rand capital injection and a 60 billion rand loan from the state will be converted into equity to improve the utility’s liquidity and boost its borrowing capacity.