Eskom to Recover $2.2 Billion of South Africa Power Costs

(Bloomberg) -- South Africa’s standard electricity users will bear the brunt of the 32.7 billion rand ($2.2 billion) the state-owned power utility can recover in unbudgeted costs incurred in the 2014 to 2017 financial years, the energy regulator said.

Eskom Holdings SOC Ltd. is able to raise power prices by at least 4.4 percent starting April 1 to claw back the expenses through its so-called regulatory clearing account, the Pretoria-based National Energy Regulator of South Africa said in an emailed statement Tuesday. It first announced the amount on June 14, and today said standard tariff customers will pay for 31.1 billion rand of that, with international clients and those on negotiated pricing agreements footing the bill for the rest.

The utility is facing financial strain as a result of factors including weak demand, delinquent municipalities that don’t pay their bills and widespread allegations of corruption. Eskom wanted to recoup 66.6 billion rand for the three financial yeas through end-March 2017.

The regulator gave Eskom permission to raise prices by 5.2 percent from April 1, far short of the almost 20 percent Eskom had applied for. The power utility implemented rolling blackouts in June for the first time since 2015 after protesters blockaded roads and attacked staff when wage negotiations broke down.

To contact the reporter on this story: Ana Monteiro in Johannesburg at amonteiro4@bloomberg.net

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Renee Bonorchis

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