Swazi Observer

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EEC WANTS 25.5% ELECTRICITY TARIFF HIKE

By Nomfanelo Maziya | 2024-11-06

CONSUMERS have been left fearing the worst following the announcement of a staggering tariff application submitted by the Eswatini Electricity Company (EEC) for the next two financial years that would dig deep into the pocket.

The tariff application was submitted, as per procedure, to the Eswatini Energy Regulatory Authority (ESERA), whose role is to adjudicate over the process to determine the rightful tariff hike – if at all. For the year 2026/27, the country’s power utility has applied for an increase of 27.06 per cent.

This comes in the wake of another tariff increase of four per cent for water, which was sanctioned by Members of Parliament (MPs) last week. The latest application by EEC excludes 15 per cent Value Added Tax (VAT) and the electrification access fund levy of 2.5 per cent.

The tariff application means that consumers would only get 32 units from E100, and 24 units the following year.

The proposed tariff hike was announced by ESERA Chief Executive Officer Sikhumbuzo Tsabedze during a press briefing at Mountain View Hotel yesterday.

“The Authority is expected to announce a decision not later than February 1 of the following year after a three-month review process,” said Tsabedze.

He added that EEC requested a revenue requirement of E4.2 billion for the 2025/26 financial year and E4.5 billion for 2026/27.

The CEO said in terms of Section 5 (1) (f) of the Energy Regulatory Act read with Section 32 of the Electricity Act, together with Sections 5 and 6 of the Tariff Methodology, ESERA was mandated to undertake a review once the request was received by November 1. Tsabedze confirmed that the request was indeed filed on October 31 by EEC.

In 2023, ESERA approved a 10.14 per cent increase for the 2023/24 financial year and a 8.02 per increase for 2024/25.

In its recent application, EEC cited electricity prices’ inability to cover the full costs of supplying power across the various tariff categories as a reason for the hike. According to the Tariff Review Proposal for the financial years 2025/26 and 2026/27 (two years), EEC again this year highlighted that currently, electricity prices did not cover the full costs of supplying electricity across the various tariff categories.

“This application therefore continues the migration to cost-reflective tariffs.”

The company acknowledged that it recognised the impact of tariff increases on the economy and households, especially the small businesses and the indigent.

Meanwhile, EEC reported a net profit after tax which plummeted by 60.5 per cent, dropping from E211 million to E83 million.

This decline, according to the EEC Integrated Annual Report 2022/23 was primarily attributed to a series of unfavourable tariff decisions and the ever-increasing costs of importing electricity. Despite these challenges, the power utility managed to maintain financial stability. There was also silver lining in the report, which was said to be the company's continued investment in infrastructure. A total of E584 million was poured into upgrading property, plant, and equipment, with significant projects including new substations and depots.

Additionally, EEC's investment in the Mozambique Transmission Company (MOTRACO) increased by four per cent.

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