The struggling state utility Eskom received approval from South Africa’s energy regulator on Thursday for a 18.65% increase in power prices, which is less than what the company requested, for the fiscal year beginning on April 1.
Eskom had asked for a more than 32% increase, citing higher fuel costs, the depreciation of its generation assets, and increased purchases from independent power producers.
A 12.74% tariff increase for the following year was also approved by regulatory body Nersa.
Eskom has been mired in a financial crisis for years and is dependent on government bailouts.
Eskom rarely receives the full tariff increase it requests from Nersa, and disagreements between the two parties frequently go to court.
“The energy regulator attempted to strike a balance between Eskom’s financial sustainability issues, the impact on the South African economy, and affordability of electricity services to customers,” At a briefing for the media, Nersa chair Thembani Bukula said.
Eskom stated that it would issue a statement regarding the tariff increase on Friday.
Most households are experiencing daily power outages of six to eight hours due to Eskom’s current power cuts, which are among the longest ever recorded. The most ever in a calendar year, it instituted power outages on more than 200 days last year.
Since taking office in 2018, the debt-ridden company has been the focus of President Cyril Ramaphosa of South Africa’s efforts to improve its efficiency. Eskom owes approximately 400 billion rand ($24 billion) in debt, which his government intends to assume in part.
Enoch Godongwana, the finance minister, said earlier on Thursday that the government would pay off Eskom’s debt gradually. He claimed that the price increase approved by Nersa played a role in how much debt the government would ultimately bear.
“It’s a crucial factor because it will show me whether Eskom is sustainable over the long haul… therefore what debt should I take,” the minister told Reuters.