Energy regulator Nersa has approved an 18.65% tariff hike for Eskom for the 2022/23 financial year and 12.74% for the next, heralding pain for consumers and industry alike. 

The 18.65% price increase for customers directly supplied by Eskom takes effect from 1 April, and the 12.74% from 1 April 2024. That translates into an increase of 33.7% over the next two years against the backdrop of high inflation, squeezed margins for power-intensive industries such as mining, and Eskom’s desperate bid to keep the lights on intermittently while preventing a full-scale blackout.  

In short, the Eskom hole just keeps getting deeper. The state-run power provider, which is in full meltdown with Stage 6 rolling blackouts and a staggering R400-billion debt load, desperately needs cash from customers that it cannot supply to meet their demand. 

The new increases — which are well above the current inflation rate of 7.4% — will just hasten a drive by households and industry alike to procure renewable and reliable sources of energy, depriving Eskom of more customers.  

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It’s a business model made in hell which is hellish for customers and the company alike.  

Eskom had applied for a 32% increase for 2023/24, underscoring the scale of its dilemma as it scrambles to buy diesel for when its coal plants fail and attempts to pay independent producers to bring more power onto the ailing grid.  

Meanwhile, Finance Minister Enoch Godongwana told Reuters in an interview earlier on Thursday that the government would take on Eskom’s debt in a “staggered manner” to prevent the country’s debt-to-GDP ratio from going through the roof.  

The Treasury said in the October “mini-budget” that it would take on between one-third and two-thirds of Eskom’s debt to boost its balance sheet and set it on the road to financial viability.  

The tariff increase, while well short of Eskom’s request, will add to inflationary pressures in the economy — “administered prices” are part of the CPI basket — at a time when the South African Reserve Bank is in a hiking cycle in step with its global peers to contain rising prices.  

The best that can be said is that it could have been worse. DM/BM