Consumers who receive 52 units for E 100.00 at the moment will receive only 45 units in 2023 and 33 units in 2024,this year a Value Added Tax (VAT) is included in the price of electricity that was not there before
Mbabane-The Eswatini Electricity Company (EEC) has received an emphatic rejection of its proposed 21.31 per cent electricity hike by the nation. Emaswati from across all spectrums of society, be they the farmers from the Eswatini Cane Growers Association to government officials and business stakeholders have given a resounding rejection to the EEC’s proposal.
In early November 2022, the Eswatini Energy Regulatory Authority (ESERA) disclosed that EEC had applied to increase tariffs by 21.31 per cent for the year 2023/4. The 21.31 per cent is an average multi-year tariff proposal to fully cover EEC’s costs for each of the financial years being applied for.
The 21.31 per cent tariff increase requested by the electricity utility comes about following the introduction of Value Added Tax (VAT) on electricity for commercial entities. This has resulted in a cost of E 214 million for the EEC. When broken down, this figure stands at approximately E97 million in 2023/24 and E117 million in 2024/25.
The ESERA embarked on a stakeholder engagement programme, covering all four regions of the country, beginning on Saturday 23 November 2022 at the Siteki Hotel. The Lubombo domestic and business electricity customers submitted their opinions and critically discussed the EEC’s application.
Following the first stakeholder consultations, the negative feedback from the ESERA Facebook page was instant. There was a general feeling that the consultation process was just a convenient process to make the public believe that their input was considered, whereas the electricity utility’s request is already a done deal and prices will certainly increase.
This means that consumers who receive 52 units for E 100.00 at the moment will receive only 45 units in 2023 and 33 units in 2024.
After the first set of stakeholder’s consultations, the EEC’s CEO Ernest Mkhonta said he was pleased with the turnout of the farmers at the Lubombo, Hhohho and Siphofaneni hearings. “They turned out in their numbers and this was a positive for us because it gives us a comprehensive view of peoples submissions.”
When making the case for the proposed tariff increase, Mkhonta said “the generation of electricity is a capital-intensive industry and the price electricity is the one that pays for all the operations of the entity. All the profits that are made by EEC are ploughed back into the infrastructure development of the company. “
H e gave an example of the Qomintaba Solar PV Plant near Lavumisa that has cost the electricity entity E 275 million and the construction of the Mvundla Off Grid Solution that cost E 3.4 million as projects that were financed by profits accumulated by the EEC. Mkhonta mentioned that there are other capital-intensive projects that are in the pipeline such as the extension of the Maguga hydro- electric project and the construction of another hydro electric project downstream of the Komati river that require external funding.
Furthermore, he indicated that there is the need for a base load energy supplier to be constructed in Eswatini as a means of securing energy for the country in the future. This supplier would be in the from of a bio-mass or coal driven producer but it was an imperative.
Mkhonta said “the tariff increases this year is driven primarily by the international oil price that has adversely affected the local fuel price. The fluctuation in the price of metals such as steel, and copper which are some of the commodities that are used as an input during the production of electricity. Transformer prices and other materials and the exchange rates following the weakening of the LiLangeni to other major currencies.”
He also emphasised that one of the major differences this year is that there is now a Value Added Tax (VAT) that is included in the price of electricity that was not there before. Furthermore, the continued suppression of the tariff over the last four years has resulted in a domino effect on cost of electricity.
The EEC’s CEO’s submission did not however impress the participants at the tariff review hearing in Ezulwini that targeted Ministries and business stakeholders. The Mechanical and Electrical Engineer representing the Eswatini Water Services Corporation (EWSC), Bongani Thusi said it was not possible for the water supply entity to accept the tariff increase. Thusi was of the view that electricity is one of the most significant inputs that is used when providing water to communities. “In recent times as a result of United Nations conventions the provision of water has become a right and therefore EWSC now finds itself compelled to provide water to all areas in the country especially in the rural areas. In most instances EWSC makes a minimal amount of revenue from providing this service.”
Thusi requested the ESERA to make a considered decision before granting the tariff requested by the EEC. “Electricity has become a major cost driver in the provision of water and it will no longer be sustainable to do so with the increased tariff.” added Thusi.