'Poor must be protected from power tariff hikes'

South Africa’s new Energy Minister, Dipuo Peters, said on Thursday that measures must be put in place to shield the poor from an electricity price increase requested by state utility Eskom.

Africa’s biggest economy is battling power shortages following years of lack of investment in new generation by the government. To plug the gap, Eskom is seeking an unpopular 34% increase in tariffs to help build new power stations.

The utility plans to spend R385-billion over five years to boost capacity, but is struggling to raise funds due to the global economic slowdown.

Last year, the power regulator granted Eskom a tariff hike, but put in place mechanisms to protect the country’s poorest power users from the additional rise.

“We as government need to work with Eskom to create a cushion for the poor,” Peters told Reuters in an interview.

“Whilst we understand that there is a bigger challenge of Eskom and its build programme, we need to protect the poor people from the increased tariff,” she said.

Peters said the requested hike would not even cover half of Eskom’s expansion needs.

The power regulator has said Eskom might need as much as a 90% hike for its expansion.

“We have to look to help fund the capital programme. We are still due to meet with Treasury on that,” she said.

South Africa’s Treasury plans to grant Eskom loan guarantees of R175,97-billion over the next five years, in addition to a R60-billion, three-year direct loan it gave the utility, which provides 95% of the country’s power.

Eskom has rationed power since January last year after biting shortages forced mines to close for days and cost the economy billions of dollars.

Clean energy
Peters said she would support more use of clean energy in South Africa, the largest emitter on the continent, which relies on coal for 90% of its electricity generation. New tariff incentives could boost investments in renewables.

“We [must] invest a lot of time and resources in expanding renewable energy as a source,” she said.

“There are indications that people have been able to save up to 40% of electricity costs by using solar water heaters. If it is massified, it would be an alternative.”

She said nuclear power was also another alternative.

“We very much see nuclear as an important source of clean energy, but we need to make sure that we understand all aspects of managing nuclear waste,” she said.

Eskom, which operates Africa’s sole nuclear power plant producing 1 800MW cancelled plans for a new facility last year, citing high costs, but the government has since taken the lead on another nuclear plant.

President Jacob Zuma elevated Peters to the Cabinet from her role as premier of Northern Cape. Some analysts said the inexperienced Peters may slow the resolution of the various challenges facing the department.

“I’m not here to be a geophysicist or a nuclear scientist. Mine is to implement policy and ... ensure sustainable supply of energy—not to go into the technical environment,” Peters said.—Reuters