South African utility Eskom asks to recover $5.5 bln via higher tariffs

JOHANNESBURG    – South African state utility Eskom is seeking to recover 66.6 billion rand ($5.5 billion) of costs incurred over the past three years through higher tariffs, saying it sold less electricity than forecast because of an economic downturn.

Eskom, which supplies around 95 percent of South Africa’s electricity, is battling to stabilise its finances under new management after narrowly averting a liquidity crunch this year.

The power firm was at the heart of corruption scandals surrounding ousted President Jacob Zuma and is regularly cited by ratings agencies as a threat to the country’s creditworthiness.

Public hearings began on Monday on whether the National Energy Regulator of South Africa (Nersa) should allow Eskom to recover the 66.6 billion rand of costs through electricity tariff increases.

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Eskom said it had spent more and earned less than Nersa had predicted when the regulator determined the path of electricity prices for the 2014/15, 2015/16 and 2016/17 financial years.

Eskom cited sluggish economic growth, commodity price changes and lower investor confidence over those years.

Calib Cassim, Eskom’s acting chief financial officer, said the firm was aware it would probably only be able to recover the costs it had incurred gradually, if its application to Nersa was successful.

Nersa is scheduled to make a decision on Eskom’s application on June 21.

($1 = 12.0750 rand)(Reuters)

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