Eskom’s R13.2 billion profit: Additional tariff hikes cannot be justified

Natasha Michael, Shadow Deputy Minister of Public Enterprises
14 June 2012

Eskom today announced its financial results for the year ended March 2012. It announced a 60% increase in profit, with the state-owned entity reporting R13.2 billion in profit.

This is almost entirely due to the massive tariff increases that South Africans have had to endure in the recent past. In the last three years, tariffs increased by 24.8%, 25.2% and 16.09% respectively.

In the light of Eskom’s massive profits in the last year, an additional tariff increase for next year cannot be justified.

The next phase of the multi-year price determination (MYPD) is currently taking place. The MYPD process will eventually determine the tariffs for electricity in the next three years. The MYPD cannot be allowed to award additional tariff increases to Eskom.

South Africans have had to deal with enormous increases in the past three years, with many municipalities adding significant charges on top of these tariff increases as well.

This has hit the economy hard, with businesses and especially poor families struggling to cope with the pressure of significant increases in the price of electricity.

We will keep a very close eye on the MYPD process to ensure that no additional tariff increases are approved. With Eskom reporting more than R13 billion in profits, additional price hikes simply cannot be justified.