July 28, 2020 / 7:22 PM / 14 days ago

South African court allows Eskom to claw back $4 bln over three years

JOHANNESBURG, July 28 (Reuters) - South Africa’s High Court on Tuesday allowed Eskom to claw back 69 billion rand ($4.18 billion) over the next three years from customers in the form of higher electricity tariffs.

Higher tariffs would pile more pressure on cash-strapped households and business buckling under the impact of the COVID-19 pandemic, but they would be a relief for the state utility, which is mired in financial crisis and has long said the regulator has treated it unfairly.

Eskom was disputing a decision by energy regulator Nersa to deduct the 69 billion rand equity injection given to it by the government in its allowable revenue method for the 2019/20, 2020/21 and 2021/22 financial years.

The government made the equity injection to help the struggling utility service its high debt.

In the judgment, judge Fayeeza Kathree-Setiloane ruled that Nersa “got it horribly wrong” and acted unlawfully by including the equity injection in its calculation of Eskom’s allowable revenue for 2019 to 2022.

Kathree-Setiloane said a sum of 23 billion rand would be recouped annually by Eskom over the next three years in electricity tariffs. This means Eskom tariffs for the 2021/2022 financial year will increase to 128.24 cents per kilowatt hour from 116.72 cents.

Eskom said it welcomed the decision which would allow it to be more self-sufficient and be in a position to recover costs and reduce its dependence on further equity support from the government.

It said measures were already in place to protect the poor from the rising tariffs, without giving details.

Nersa said it was studying the judgement and would advise on the way forward in due course.

“The judgement, if left uncontested, will not only disrupt the industry, but will further suppress economic recovery, considering the current threat that the country’s economy is facing,” it said in a statement. (Reporting by Nqobile Dludla; Editing by Giles Elgood)

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