S.Africa energy regulator okays 8% tariff hike

South Africa’s energy regulator Thursday granted electricity provider Eskom an eight percent tariff hike over the next five years, half of what was requested.

The National Energy Regulator of South Africa (NERSA) chairwoman Cecilia Khuzwayo announced the hike “will be eight percent over the next five years.”

Eskom last October applied for 16 percent increases as it battles to avoid crippling brownouts which rocked the country in 2008.

But unions strongly opposed such a sharp increase, saying it would lead to job losses, factory closures and a rise in prices.

NERSA’s announcement is closer to inflation-linked increases as demanded by unions, who welcomed the decision along with opposition parties.

South Africa’s inflation is hovering above five percent at an annualised rate.

A 16-percent hike would have more than doubled electricity prices by 2018.

Rolling power cuts in 2008 forced the state-owned entity to rethink its power generation strategies, as supply remains under pressure due to growing demand.

In November 2010, Eskom got a 15 billion rand ($2.2 billion) loan from the Development Bank of Southern Africa to fund new power projects.

The company has received several other loans from various international institutions to support its expansion plans.