JOHANNESBURG – Independent energy analyst Ted Blom accused Eskom on Tuesday of overcharging and inflated profits.
He made the accusations on the first day of African Utility Week.
“Despite the tariff in 2013 being 65c/kwh in our part of the world, the actual cost of getting electricity onto the grid is below 31c/kwh so there’s more than 100% mark-up and I think from the public’s point of view that would be totally unacceptable.”
He claimed these inflated figures have been the basis for the massive electricity increases we’ve faced over the past three years.
By his calculations this has resulted in lost GDP growth of between 3 and 5 percent per year.
Blom is no stranger to Eskom, having worked as its head of financial consulting for two years in the 1980s and as a contractor in 2006. More recently, he has crossed the floor, joining Outa (the Organisation Undoing Tax Abuse) in its legal battle against Eskom price hikes.
Blom says Eskom inflated prices to cover operational costs and bonuses.
But Eskom says that after years of under-charging consumers, it has been necessary to correct prices.
Spokesman Khulu Phasiwe said: “From 1988 up until 2003 Eskom had artificially kept prices very low. This is mainly because Eskom is not aimed at making profits. We had to do this to cushion the blow against the poor.”
When Blom and Outa went to court earlier this year over Eskom’s April price hike of 9.4%, they lost.
But Blom says the legal battle is far from over; Outa will return to court in the next 60 days to try to get the latest hike reversed.
Eskom says the National Energy Regulator will hold public hearings next month, after which the recent price increases will be reviewed once again.