Eskom’s tariff increase to hit consumers hard

Eskom’s debt of more than R400 billion is going to hit Dolphin Coast residents like a ton of bricks.

A staggering deficit of R46.6 million is projected in KwaDukuza’s 2019/2020 draft budget following the proposed electricity tariff increases by the National Energy Regulator of South Africa (Nersa) last month.

The proposed electricity tariff hikes of 13.81% for the new financial year, which starts in July is almost three times the rate of inflation and could have catastrophic consequences on service delivery in the region.

Nersa has yet to release the final tariff increases and according to the municipality’s finance committee, the unanticipated additional electricity increases will create a nett deficit of R46.6 million in the current draft budget.

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As a result of the increased costs several cuts will have to be implemented before the final budget is tabled in council next Thurday, said KDM chief financial officer, Shamir Rajcoomar, speaking at a special council meeting last Thursday.

The hike of 13.81% is less than what Eskom had initially asked for which was 17.1% for the 2019/20 financial year, 15.4% for 2020/21 and 15.5% for 2021/22.

While Nersa’s allowable tariff whittles down from next year, Eskom is allowed adjustments to the tariff to account for unforeseeable expenses or lower than expected electricity sales.

The energy regulator said the requirements of business, the public, and the power utility were taken into account when making its decision on tariffs.

The cash-strapped power utility has seen this as the only way it can recuperate the loss it has suffered at the hands of mismanagement, poor leadership and financial irregularities.

Councillors voiced their concerns on the impact the hikes will have on already struggling residents, pensioners and the poor.

Party representatives were united in their appeal to council and the finance committee that municipal budget cuts should not come out of infrastructure and service delivery projects but to rather look at reducing expenditure on non-priority items.

Speaker of the KDM council, Phumlile Zulu requested the finance committee present the restructured budget to council for review before it is tabled for approval at the end of the month.

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