JOHANNESBURG - As South Africa prepares for Finance Minister Enoch
Godongwana’s budget speech, concerns are mounting over Eskom’s ongoing financial struggles, and the possibility of tax increases to cover the state-owned power utility’s shortfall.
Energy expert Chris Yelland says while the National Energy Regulator of South Africa (Nersa) set electricity tariffs for the next three years, the approved increases fall far short of what Eskom claims it needs, to remain financially stable.
Eskom requested a 36-percent tariff increase, but Nersa only granted 12.7 percent - leaving a significant funding gap.
According to Yelland, this raises the question on how this shortfall will be covered.
“Government keeps saying Eskom is too important to fail. In real terms, this means if Eskom can't make enough money from electricity rates, it will have to slash expenses - hurting operations and upkeep - or ask National Treasury for another cash injection.”
The power utility has already received substantial financial assistance from government over several years.
Yelland says strict conditions were attached, many of which have not been enforced.
“There are reports that government might have to increase taxes, increase VAT, increase personal taxes, increase company taxes and that is what we can expect to see one way or another in the budget.”
Stay tuned to #DStv403 for full coverage of the budget speech and its impact on the everyday South African.
- by Estelle Bronkhorst