These value climbs are as of now sifting through to end-clients in various municipalities, as seen with ongoing value change notices from areas like the City of Joburg. The bank’s information shows that power spend is one of the biggest spend categories for section to working class clients, where the normal power spend by a client who holds its Entry Market bank account (Easy Account) increased by 9% (on average) between 2019 and 2020.

The normal month to month power spend by a centre market (Gold Account) client expanded by 15% while a mass-prosperous (Premier Account) client through 14% more on power a similar period. It added that clients routinely go to eBucks to enhance their power buys, utilizing R4.5 million worth of eBucks for power buys over a similar period.

“The reality is that all customers will need to factor a 15% increase on what they have been spending on electricity on a monthly basis, on account of a family spends generally R500 each month on power, that family needs to factor in any event an extra R75 to what they have been paying.

Fuel Price Increase

Drivers will likewise have to battle with higher fuel costs in April, with the cost of petrol now somewhere in the range of R1 and 95cents a litre more costly. The cost of 95 (ULP and LRP) went up R1 on Wednesday 7 April 2021, while the cost of 93 (ULP and LRP) climbed 95 cent a litre. In the interim, diesel (o,05% sulphur) increased by 65.20 cents a litre, while the cost of diesel (0,005% Sulphur) went up by 63.20 cents a litre.

Te cost of illuminating paraffin went up by 34.80 cents.The cost of illuminating paraffin (SMNRP) increased by 35 cents, while the greatest retail cost for LPGAS increased by 48 cents for each kilogram. With effect from 07 April 2021, the fuel levy in the price structure of petrol and diesel will therefore amount to 393 and 379 cents a litre respectively.

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Eskom is working with the national energy regulator of South Africa (NERSA) to raise electricity tariffs to a level where it will be able to recover the efficient cost of the electricity from consumers.

Demand Projections and Municipal Prices

Eskom’s current demand projections are based on all currently known factors, including the staggered reopening of the economy on accordance with the government’s plan. The demand remains significantly lower than what can normally be expected during the winter period, however, Eskom is experiencing an increase in demand s the COVID-19 restrictions are gradually relaxed but do not expect to have demand levels similar to previous years.

Eskom said that “they required to make applications for revenue and the regulatory clearing account” and NERSA will make determinations for electricity price increases in accordance with its mandate.

The power utility also noted that municipality undergo similar approval processes from NERSA,

“The difference is, however, that municipalities are in a position to allow for surcharges that could in effect further increase the price of electricity” said Eskom.

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“Nersa received numerous complaints regarding the City of Cape Town’s electricity tariffs and is looking into the matter”, Charles Hlebela confirmed. The investigation was widely welcomed, specifically from civic organisation Stop Coct, who had called for a public hearing by Nersa into electricity tariff increases which saw some property owners coughing up way more than the 8.8% increase as stated by the City.

According to Stop Coct spokesperson, Sandra Dickson,  it appears that the City of Cape Town seem to have implemented tariff increases higher than what was initially recommended and approved by Nersa. For 2019/2020 Nersa approved an average increase of 13.07% for municipalities and the City of Cape Town had applied for a 11.30 % increase. However, the City of Cape Town announced in its budget that it would keep the electricity tariff increase at 8.8% for the current financial year.

This, according to Dickson, is technically flawed as some residents have been paying way more than the 8.8% tariff increase advised by the City. Some residents also paid a surcharge of R163.50 if their properties were valued at more than R1 million as well as a flat rate of 10%.

It also stopped giving free electricity units to customers whose monthly usage of electricity per month was more than 450 units over a period of 12 months.

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State-owned enterprises, access to higher education, women abuse, unemployment and the revival of the economy were among the key issues that were raised during the SONA speech. The SONA proceeded quite peacefully throughout it’s duration, with no disruption from members of parliament, particular the red side of it, unlike in recent times.

Perhaps the Eskom funding announcement raised a few eye-brows. During the SONA, President Cyril Ramaphosa announced that parliament will urgently table a special appropriations bill to allocate a ‘significant portion’ of the R230bn in fiscal support that struggling power utility Eskom requires. It was not mentioned what portion in monetary terms would be allocated.

He said Eskom only has sufficient cash to meet its obligations until the end of October 2019. Eskom supplies over 90% of all South Africa’s electricity demands, yet the ailing state-owned entity power utility are struggling to generate the revenue to make a profit, neither pay off the interest on it’s mounting debt burden swhich, according to reports, is approaching R500bn.

During the SONA, Ramaphosa said the special appropriations bill had to be implemented because “Eskom is too vital to our economy to be allowed to fail”.

He said that further details would be provided by the minister of finance.

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This comes after newly sworn in mayor, Stevens Mokgalapa made mention and discussed the tariff hikes during his 2019/2020 budget speech, delivered at the Tshwane House. He also confirmed that they would be effective as of 1st of July, 2019. Below we take a closer look at the numbers:

It is quite important for resident to take note of these increases and plan accordingly. With regards to the property rates, according to Mayor Stevens Mokgalapa, “All residential properties are not charged any property rates on the first R150 000 of the value,”.

Mokgalapa said the budget was pro-poor, saying it impressed on the 28 000 City employees to deliver services to the people without excuses.

He said he was mindful that the budget was delivered during hard economic times in the country.

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“It is no secret that this role comes with unimaginable demands which have unfortunately had a negative impact on my health,” the outgoing CEO said in his statement.

At the end of March, Eskom’s debt stood at R440bn and it isn’t selling enough electricity to cover its interest payments and operational costs, according to the company. The utility was at the center of an alleged looting spree that mainly targeted state companies during the ignominious tenure of former president Jacob Zuma.

Public Enterprises Minister Pravin Gordhan, who, as part of his duties, oversees Eskom, wouldn’t comment on Hadebe’s departure. According to his spokesperson, the issue with regards to the resignation is an issue that is for the board to deal with.

While the resignation may be a negative factor in the short term, as it would likely disrupt the leadership at the power utility, it does provide an opportunity. The newly elected President Ramaphosa and the board will now be tasked with the decision of entrusting the massive job at hand with someone that could potentially address the massive operational and financial issues.

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Eskom Unbundled

In this section of the budget speech, he also gave some very interesting insight on how the separation of Eskom would work, from a financial point of view. In the state of nation address earlier this month by President Cyril Ramaphosa, an announcement was made that Eskom will be split into three separate entities, in a bid to stabilize the finance and governance problems of Eskom. You can read more on that here.

Financial Summary

Before delving into the conditions that was set by the finance minister, Tito Mboweni, it’s perhaps a good idea to just have a over view of the current situation with regards to the situation at Eskom. Eskom, who does not make any profit off the current price of electricity, have a total debt of R419bn. They have reportedly asked for a support package of R100bn.

Conditional Relief

The financial support announced by Mboweni yesterday, amounts to R23bn per year, over three years. “We are setting R23bn a year to financially support Eskom during its reconfiguration”, he told parliament. However there are conditions. The financial injection is also meant to support the separation of Eskom and to that end. Part of the condition is that a “Chief Reorganization Office”, will need to be appointed by Mboweni and Public Enterprises minister, Pravin Gordhan. The elected person will work with the board of Eskom and management to carry out the recommendations of the Presidential task team.

Finance minister, Tito Mboweni said that more announcements would be made in the coming weeks.

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“Headquarters of Eskom, Megawatt park, north of Johannesburg. Eskom generates approximately 95% of the electricity used in South Africa and approximately 45% of the electricity used in Africa” Credit: ENCA

The first claim relates to a backdated claim for a shortfall of R21.6 billion for the year 2017/2018. Eskom says that this shortfall is down to below budget electricity sales revenue. This, according to Eskom, this seems to be the major component of this claim.

The second claim relates to it’s three-year budget. This is where they claim to be entitled to tariff hike of 90%, according to the Multi-Year Price Determination. The request for 15% hikes over the next three years is an attempt by Eskom to accommodate the country.

For the next three years Eskom will be permitted to clawback an additional R8bn from customers as a result of the adjudication of the regulatory clearing account (RCA). This accounts for an additional 4.41% increase, which will be added to the tariff. That means that should Eskom be granted its price application in full, tariffs in 2019-2020 will rise 15% plus the 4.4% allowed for by the RCA.

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