Regulator must keep Eskom in check — Busa

The National Energy Regulator of SA (Nersa) has a duty to ensure that Eskom’s structure and operating model are adequate to deliver SA’s electricity needs at an affordable cost, Martin Kingston, vice-president of Business Unity SA (Busa) said on Thursday.

He was one of several speakers at Nersa’s public hearings in Midrand on Eskom’s application for a 19.9% tariff increase in 2018-19, the last in a series of hearings around the country.

So many submissions have been received that Nersa has extended the two days scheduled for oral presentations to three. Outside the hall, a vocal protest was in progress from a small group demanding free electricity for the poor.

Several other speakers from the private and public sector echoed Busa’s view that Eskom could not continue to operate on a “business as usual” basis.

In recent months, there have been serious allegations of corruption and breaches of corporate governance at Eskom, resulting in the suspension of several executives.

Eskom interim group CE Sean Maritz warned that failing to grant Eskom a suitable tariff increase would affect SA’s longterm economic plans.

Kingston said Nersa had a responsibility to ensure Eskom did not pose a risk to the fiscus. It should place conditions on any tariff increase, including that any increase over the next three to five years should be at a maximum of consumer price inflation (CPI) and that Eskom had to demonstrate that all expenditure had been incurred prudently.

Maritz said that Eskom had a five-point plan to rebuild robust corporate governance, including educating the board, leadership and employees on ethical conduct and reporting, independent auditing of the leadership’s lifestyle and conflicts of interest, terminating all irregular contracts and instituting disciplinary action, accompanied by legal action if required.

Sibanye-Stillwater senior vice-president Peter Turner said if a 19.9% hike was granted, it would push three of the group’s marginal shafts into a loss, which threatened six tonnes a year of gold and platinum group metals production, R3.3bn of Sibanye’s revenue and R367m of revenue to Eskom.

Closure of these shafts would affect about 8,663 direct jobs and 1,770 contractor jobs.

Dhiraj Rama, executive director of the Association of Cementitious Material Producers (representing SA’s largest cement firms), said in 2002-17 SA’s electricity prices rose 356%. This was severely constraining cement producers, 40% of whose costs were electricity.