Expect steeper electricity prices
Embattled South African power utility Eskom has warned that current electricity prices are not sustainable and added that South Africans should expect steeper price increases in the near future.
Eskom's statement comes as the country faces a power crisis in the wake of national electricity outages, and a little over a week after the utility was placed on a credit watch negative by Standard and Poor's.
The National Energy Regulator of South Africa (Nersa) approved a 14.2% price increase for the 2008/09 financial year in 2007 over Eskom's application for a rule change that would have resulted in an average increase of 18.7%.
Prices unsustainable
The electricity parastatal said in a statement that the lower price increase would make it "even harder" for it to satisfy conditions in the current financial markets to assure the funding needed for the capital expansion programme to ensure security of supply.
It said its inability to implement higher price increases meant it would now have to borrow more to fund its expansion.
"In addition, the current electricity prices are unsustainable and will result in steeper increases being required in the near future," Eskom said.
"We are considering the implications and the options available to us to manage the situation," Eskom finance director Bongani Nqwababa said.
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