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18 June 2008

Government is pleased that the National Energy Regulator of South Africa (NERSA) has provided certainty in terms of Electricity pricing, which will ensure that the tariff is equalised to the long-run cost of producing electricity over the next few years. This is reflected in the announcement by NERSA that the tariff increase for the current year will be 27,5% (nominal) replacing the 14,2% initially approved and has indicated that increases over the next few years will range between 20% and 25% real. This has the benefit of ensuring the sustainability of the electricity supply industry and encourages energy efficiency in industry and households. Government also welcomes the protection afforded to low-income and poor households in the tariff announcement.

"We welcome the decision that NERSA has taken. It confirms governments view that, as a country, we cannot avoid higher than normal electricity price increases, but at the same time we have to be cognisant of the current economic hardships faced by many of our people." the Minister of Minerals and Energy, Ms Buyelwa Sonjica, said.

A team from National Treasury, the Department of Public Enterprises and Eskom is currently working to finalise the appropriate fiscal injection by the state to strengthen Eskom's balance-sheet to enable the company to enter financial markets competitively.

In the coming months Eskom will submit their tariff application for next Multi-Year Price Determination (MYPD2) given the rule changes that will cover primary energy pass-through.

For further information please contact:
Vimla Maistry
082 372 0270

Bheki Khumalo
082 773 2388

Issued by: Department of Minerals and Energy
18 June 2008