South Africa had deliberately under-priced electricity in the past, Eskom chairman Bobby Godsell said in Johannesburg on Friday.<\/p>\n
“In the past, South Africa was not a popular destination for investment and so the government had to provide an incentive and that was cheap electricity,” he told the Steel and Engineering Industries Federation of SA.<\/p>\n
However, it had been unwise to set the electricity price below the real operating cost of producing it, Godsell said.<\/p>\n
“The government did open up the electricity sector to new players but no one came in because the tariff was half of the cost of production.<\/p>\n
“So we need to address the tariff,” he said, adding that a “systemic” change to South Africa’s tariff architecture was necessary and that tariffs had to increase.<\/p>\n
Godsell said Eskom’s coal supplies for power stations were now at 42 days.<\/p>\n
“Last year the average was 12 days.”<\/p>\n
Eskom was engaged in a capital expenditure programme of R385 billion.<\/p>\n
“This is four times the size of the Gautrain project,” he said.<\/p>\n
“Our programme is on schedule and we think the cost may remain at R385 billion — or it could drop.”<\/p>\n
Godsell said the debate around electricity in South Africa was not “an Eskom debate”.<\/p>\n
“It is a South Africa Inc debate involving 48 million South Africans. If we want economic growth then we need more electricity,” he said.<\/p>\n
Asked to discuss Eskom’s latest tariff application, Godsell said the 93-page document would be made public next week and he preferred not to comment at present.<\/p>\n
This followed a leak to a news agency on Thursday that the parastatal had requested tariff increases of 45 percent a year for three years ending on March 31, 2013.<\/p>\n
“We are going to be canvassing with the shareholder on the weekend and I don’t want to say anything,” Godsell said.<\/p>\n
As electricity had been cheap, South Africans had used it very wastefully, he noted.<\/p>\n
“But there’s lots of things you can do — get a solar geyser, use gas for cooking, change your lifestyle — these are things you can do to mitigate the tariff increase, Godsell said.<\/p>\n