BUSINESSES TO SAVE OVER E20M IN ELECTRICITY

MBABANE – Commercial electricity consumers will save up to E21.7 million in electricity in the current financial year.

The saving on electricity comes after the Eswatini Energy Regulatory Authority (ESERA) recently announced the approval of three per cent tariff hike on electricity for domestic consumers and there was no change effected on businesses except 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. 

Mathematically, this means that the three per cent increase on domestic consumers and the 1.33 per cent decrease on the average tariff, gives the non-domestic consumers a relief of 4.3 per cent. Given that the current subsidy paid by the businesses amounted to E501 million annually, 4.33 per cent of that is E21.7 million.

ESERA Manager Consumer and Stakeholder Management Sikhumbuzo Nkambule said the organisation was cognisant of the prevailing socio-economic conditions, the COVID-19 pandemic inclusive, as well as the negative impacts it had brought to many families. He said having evaluated all prevailing circumstances, taking into account the many families that have been structurally denied access to clean energy; it had found it more beneficial to the citizens to begin the process of gradually rebalancing the tariffs. 

“What do we mean by rebalancing tariffs? At present, tariffs in Eswatini are such that, all domestic customers are being heavily subsidised by business customers, to ensure that every liSwati can have access to clean energy. “This heavy cross-subsidy is as a result of high cost of delivering power to customers, as informed by a Cost-of-Service Study conducted in 2018,” he said. 

Nkambule shared that the study informed the sector that, at present, the average cost of electricity supply per unit stood at E2.11, yet domestic customers were currently paying less than this average. 

This means that the rest of the non-domestic customers (business customers) are shouldering the rest of the balance to offset the difference from average unit cost of  E2.11 to the current E1.75 per unit being paid by domestic customers. 

“The present subsidy being contributed by business customers is E501 million – business could use to pay taxes, offer better CoLA/increments, re-invest and create more jobs. 

“This subsidy makes our local companies uncompetitive on the international markets due to higher production costs, one of which is electricity. Further, businesses could relocate due to cost of doing business being higher due to the subsidy, thus create high unemployment,” he said. 

 Nkambule explained that at face value, an increase in a price of a commodity could be viewed as negative, hence the need to unpack fully the tariff rebalancing package. 

He further explained that by increasing domestic tariff by 3 per cent, the authority had therefore considered cushioning a huge number of the most vulnerable customers through the Life Line tariff as opposed to protecting a few affording customers, whilst maintaining the buying power of the remaining customers who are still employed and cushioned by a 3 per cent Cost of Living Adjustment. 

“This has been seen as the most equitable distribution of limited resources which can be deployed in these trying times of COVID-19. The Authority has further tried to ensure that the general price level do not increase, in fact the general price level went down. By extending most of the benefits of the price fall to business, the Authority is confident that the interest in self-generation by business customers will diminish, hence ensuring long-term price stability.”

Business Eswatini (BE) welcomed the decision by the energy regulator that saw commercial tariffs marginally reduced while moderately increasing the consumer side of the equation. 

BE’s Chief Executive Officer Nathi Dlamini stated that the organisation’s aspiration and goals for improving the economy and creating a low-cost investment destination for international and local investors was shared by EEC, which was a good thing.  He shared that they were proud of their association with EEC and for their good intentions for both commercial and domestic consumers.

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