SERA INCREASES ELECTRICITY BY 11.7%

MBABANE – Consumers and the business community should brace themselves for 11.7 per cent increase in Swaziland Electricity Company for the next two financial years beginning from April 1, 2015.

Fixed charges on all customer categories with exception of domestic and lifeline tariff were increased by inflation rate at 5.8 per cent in 2015/16 and 2016/17 financial years.  
This was disclosed by Swaziland Energy Regulatory Authority (SERA) Chief Executive Officer Vusi Mkhumane during a press conference held at the company’s head offices yesterday.

Mkhumane said the tariff hike had been motivated by the fact that Swaziland’s major supplier of electricity, Eskom, has proposed to increase electricity prices by 13.19 per cent with effect from the beginning of April.
Mkhumane said in October 2014, SEC initially submitted an application for multiyear tariff increase of 10.51 per cent for the financial year 2015/16 and 10.50 per cent in 2016/17. However, due to complications within the electricity industry, SEC submitted a revised tariff increase of 11.39 per cent and 10.60 per cent on January 20, 2015.

“Based on the SEC tariff increase application and supplemental data provided and review of the tariff application and submission made during the public hearings, SERA has decided on an average tariff increase of 11.70 per cent for the 2015/16 and 2016/17 financial year,” disclosed Mkhumane.

SERA said SEC, in its quest to balance the tariff increase of 11.7 per cent, ought to ensure that no one customer category increases by 14.35 per cent.   Mkhumane said the approved tariff hike had also been influenced by the fact there has been little rain to enable SEC to generate more electricity locally, and that this pattern was expected to remain the same for the foreseeable future, forcing the SEC to continue to import electricity from foreign sources of supply that include South Africa and Mozambique. Further, the SERA CEO said due to load-shedding by Eskom, SEC was forced to run down its reservoirs, generating locally to counteract the effects of Eskom’s load-shedding.

Another motivation for the increase, according to Mkhumane was: “the rand continues to deteriorate against the dollar, therefore, making foreign currency denominated purchases more expensive.”
SERA also noted that in previous years, SEC had been awarded insufficient tariff increases to sustain the company operations.

“The under recovery amounted to E419 million, which SEC will recoup from consumers,” said Mkhumane. SEC Corporate Communications Manager Sifiso Dhlamini recently said not being granted the tariffs they normally applied for would make it very hard to meet their obligations.  “If SEC is not granted the tariff hike that we applied for, it is not only the company that gets crippled economically but the entire country. The continuous reduction of the proposed hike by the regulator, as observed in neighbouring countries, could force tariff hikes to be tripled in future in order to cover-up for costs caused by the continuous failure to grant what was applied for,” observed Dhlamini.   

When asked what effects reduction of the proposed tariff hike by SEC could have, Dhlamini responded: “If the proposed tariff hike is not granted to SEC, capital projects could be stalled. Just like in the past when we were not granted the proposed tariffs, capital projects such as sub-stations and general improvement of the company’s infrastructure will be delayed. However, this could have drastic effects because if infrastructure is not well maintained, consumers experience frequent outrages.”

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