The National Energy Regulator of South Africa’s (NERSA) says electricity tariffs in countries of the Southern African Development Community (SADC) countries could be raised by 100% in order to attract investors for the much needed infrastructure development. A senior NERSA official Brian Sechotlho said the region is standing in a dilemma as they are caught between enabling electricity access to the poor, but at the same time they need to come up with tariffs that would attract investors in terms of returns on investment.
“From the results of our assessment, it is clear that current prices are not sufficient to attract investments in much needed infrastructure,” he said “as per the modeling, it looks like the tariff must be set at least at $13 cents per kilowatt hour. This means that for some countries (in the SADC), the tariffs will have to increase by more than 100 percent.”
However, he said a careful path should be chosen in moving towards cost-reflective tariffs as a careless decision might discourage investments in other developmental projects in the region.
“There should be a thorough economy impact assessment and care must be given to ensure continued support to low income citizens,” he said, “the tariff may be increased at a low rate over a certain period of time while analyzing and monitoring the situation.”
The National Energy Regulator of South Africa (NERSA) is a regulatory authority established as a juristic person in terms of Section 3 of the National Energy Regulator Act, 2004 (Act No. 40 of 2004). The mandate of NERSA is derived from legislation governing and prescribing the role and functions of the Regulator, is summarized as follows:
• Issuing of licences and setting pertinent conditions;
• Setting and/or approving tariffs and prices;
• Monitoring and enforcing compliance with licence conditions;
• Dispute resolution including mediation, arbitration and the handling of complaints;
• Gathering, storing and disseminating industry information;
• Setting of rules, guidelines and codes for the regulation of the three industries;
• Determination of conditions of supply and applicable standards; and
• Registration of import and production activities.