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South Africans can expect a sharp surge in their electricity tariffs, with Eskom confirming an average price increase of approximately 15% from 1 April 2021. On Tuesday, 16 February 2021, the High Court of South Africa (Gauteng Division) ordered that an amount of R10 billion be added to Eskom’s allowable revenue to be recovered from tariff customers in the 2021/22 financial year.
Welcoming the decision, the power utility notes, “This court decision allows for Eskom to recover efficiently incurred costs for the production of electricity. It also contributes to the “user pay” principle and is likely to lessen the financial burden of supporting Eskom on the Government, releasing the Government to focus on other priorities.”
Moreover, Eskom states the implementation of the order will allow it to move towards addressing revenue shortfalls, while allowing the entity to recover incurred costs for producing electricity, which will assist in improving its financial sustainability.
On a positive note, Eskom is making strides in collecting revenue from defaulting municipalities. This is mostly thanks to the KZN branch of Cooperative Governance and Traditional Affairs (COGTA).
Over the past three years, KZN COGTA has played an essential role in facilitating negotiations with the respective municipalities who owed money to the power utility. One of these municipalities was Abaqulusi (Vryheid) Municipality, which managed to clear its R52.5 million arrear debt. Moreover, Eskom has also commended the Newcastle Municipality for adhering to its payment arrangements and reducing its debt by a jaw-dropping R38.3 million.
While admitting negotiations between itself and the Newcastle Municipality started off on shaky ground, the power entity states, “The progress made shows that a lot can be achieved with determination and alignment of focus, and Eskom thanks COGTA for this.”
With the electricity tariffs set to increase and Newcastle Municipality working off its debt, what are your thoughts?
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