South African regulator allows Eskom to raise tariffs by 2 percent in 2017/18

* Tariff hike a third of inflation rate

* Regulator says Eskom can apply for higher increase

* Utility has not said if it will

* Eskom racing to build new power plants, keep lights on (Adds Eskom response, details)

PRETORIA, Feb 23 (Reuters) – South Africa’s Energy Regulator said on Thursday it had allowed state-owned power firm Eskom to raise tariffs by 2.2 percent in the 2017/18 year, but said the utility was free to seek an even higher increase.

Eskom, the sole supplier in Africa’s most industrialised economy which is scrambling to repair its ageing power plan and build new ones, said it would hold consultations about the hike but did not say if it would apply for a higher increase.

“We are opening the door for Eskom to make an application,” NERSA chairman Jacob Modise told a news conference in Pretoria.

Eskom has been imposing above-inflation increases on its customers – the past financial year it raised rates 9.4 percent, the previous 12.7 percent – provoking cries from industry and households alike. But Eskom maintains big hikes are needed to shore up its balance sheet and keep the lights on.

The 2.2 percent increase is a third of the current inflation rate of 6.6 percent.

“Eskom is considering these decisions and after consultation with various stakeholders, will decide on how best to implement the … decision,” the utility said by email in response to questions from Reuters.

In 2015, the utility was forced to impose almost daily power cuts, or “load shedding”, that hurt economic growth and underscored the scale of the challenges it faces. But has since improved power supply, ending the dreaded blackouts.

 

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