ESWATINI IN ELECTRICITY DILEMMA

MBABANE – While considering bringing electricity tariffs to economic levels, the issue of affordability cannot be overlooked.

The dilemma that the sector finds itself in is that of ensuring that the conflicting goals of the different stakeholders are met. 

The Eswatini Regulatory Authority (ESERA) recently announced the approval of the three per cent tariff on electricity for domestic consumers and there was no change effected on businesses except that the authority announced a decrease in the average tariff on electricity. 

The decrease was staggered in two, with 1.33 per cent for the 2021/2022 financial year and 1.27 per cent for the 2022/2023 financial year. 

Affordability 

However, ESERA Manager Consumer and Stakeholder Management Sikhumbuzo Nkambule said it was difficult to strike a balance between affordability and efficient pricing of the electricity service. 

He said high residential tariffs for instance, could undermine the Sustainable Development Goal 7 relating to access to clean and affordable energy.

“In short, we are in a dilemma as a country, and the SADC region as a whole, the electricity must be accessed by the poor, hence it should be affordable, but at the same time we need investors who will perceive our electricity tariffs as sustainable, and that can only happen when those tariffs are cost-reflective,” he said. 

However, Nkambule said Eswatini needed to find a solution to balance the equation because electricity was the stimulus of the economy.

Nkambule said it was very important for the electricity supplier to continue to invest in developing the sector and this could be achieved through having a controlled profit margin over and above the actual costs of providing power supply. 

He said this was called a return on Regulated Asset Base (a measure of productivity for all assets being utilised for the production of power, excluding donor and customer funded assets) and it is a very critical aspect of regulation. 

“Considering cost-reflective tariff is important in order for the regulators to consider how the less privileged can access energy supply at an affordable tariff rate. Also, the same cost reflective tariff is important for consumers, be it business or domestic, to ensure they pay the actual cost that is incurred in bringing electricity to the consumption point,” he shared.

Nkambule submitted that a cost-reflective tariff reflects all costs associated with providing the service to a particular customer or group of customers with similar characteristics and this would take into account all costs incurred in the value chain, from generation, through transmission, to distribution.  

He said cost-reflective tariffs therefore provide economic efficiency through sending proper signals to consumers, while ensuring sustainability on the part of the service provider.  

“If electricity is priced below the efficient cost, the service provider will be unwilling to meet an increase in demand,” he said. 

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