Eskom tariff increases & related matters, with Deputy Minister

Meeting report

The Chairperson welcomed the Members of the Committee, the Deputy Minister, the Chairperson of Eskom, and the delegation from Eskom. The meeting had been convened for the Committee to get a briefing from Eskom regarding the tariffs which had been affected. Eskom would brief the Committee on the increases for the current financial year 2023/24. The Members would also raise pertinent issues relating to the work of Eskom. Therefore, during the discussion, the Members would not only discuss the issue of the tariff increases. The Committee would deal with some of the issues that it felt relevant in terms of national interest. The Chairperson noted that it was Deputy Minister Bapela’s first appearance in this Committee. The Committee wished him well in his new portfolio as the Deputy Minister of Public Enterprises. The Committee looked forward to working with him.

The Chairperson noted that the Committee was always scheduled to meet on Wednesdays. The Committee often experienced a situation where the Minister and the Deputy Minister were not able to attend the Committee meetings on Wednesdays. The Committee was aware that Cabinet Committee meetings were held on the same day. It was a matter that had been a challenge. While the Committee had not made an alternative date for its meetings, he appealed that the Ministry always be present to lead the entities that appeared before the Committee. This challenge caused the Committee not to sit for a while. It had to endure a few postponements, which made the Committee’s work difficult. The Chairperson was grateful that the Deputy Minister was present. This indicated that what the Chairperson had been raising was being attended to. The Chairperson invited the Deputy Minister to address the Committee.

Deputy Minister Obed Bapela, Department of Public Enterprises and Communication, said that the Minister was not able to attend the meeting because today was a Cabinet Committee meeting day. He noted the comments made by the Chairperson that the Ministry should always be present when invited to the Committee’s meetings. He was leading a delegation from the Department and Eskom. He noted that the issue of the tariff increase was a painful situation but at the same time, there was a business that needed to be run. There were a number of debates in the past about whether electricity costs in South Africa were high or low in comparison with other countries globally, particularly those that were considered third-world countries. At some points, the increments Eskom wanted were rejected and then it would go a period without any increment. The presentation would discuss how the tariff increase was arrived at. There was the cost of living that people were subjected to and external factors, like the conflict between Russia and Ukraine. It had exacerbated the cost of living due to shortages of fertilizers globally. There was a shortage of certain grains and wheat. There was also the energy crisis that Europe was facing, as a result of that particular conflict. It had an impact on Africa. He raised those elements so that when people engaged on the issue they considered both internal and external factors that had resulted in the cost of living being high. The fuel crisis would also lead to increases in the prices of travelling to work and the production of food. People use diesel, petrol and other fuels. He noted that energy was facing constraints.

Members were free to engage robustly with the Department and Eskom. They were present to provide answers which were within their own mandate. He thanked the Chairperson for the welcome. He hoped that he and the Committee would work together for the collective interest of South Africans.

Mr Mpho Makwana, Board Chairperson, Eskom, made introductory remarks. He introduced the delegation from Eskom. Eskom had prepared a brief but comprehensive presentation on tariffs. The dilemma Eskom always found itself in was that its revenue model was regulated, and tariffs based. Eskom had to go to NERSA to engage for an application for a multi-year price determination. This culminated in the approval of the tariff. After the approval, it was always a challenge for all South Africans, business leaders and owners to absorb the tariff that had been granted. The executive team would go through the model of the tariff increase and the technical aspects. Thereafter, Eskom would clarify matters through the questions and answers session. Mr Makwana invited Mr Cassim to lead the executive team.

Briefing by Eskom on tariff increases for 2023-2024
Mr Calib Cassim, Interim Group CEO, Eskom, provided a synopsis of the decision and how beneficial it was. It was a tough decision and it had been a tough decision for NERSA to make, taking into account the environment of load shedding. Eskom believed that the decision made by NERSA for the financial year 2024 and 2025 of the 18.6% and 12.7% decision, in conjunction with the debt relief that the Minister of Finance announced in February, had placed Eskom in a much better financial position. Eskom was now able for the first time in about six years to release capital expenditure for the next three years for generation, transmission and distribution. Through a board decision made in March, Eskom had decided that it would not borrow for five years. This showed that the combination of the debt relief and the tariff decision would have a positive impact on the financial situation. It allowed management to focus on the pressing operational requirements. The most pressing issue was dealing with load shedding in the country. It was also a decision that Eskom believed NERSA had substantially complied with the methodology. Eskom had decided to not review this decision. The past few decisions had been reviewed by Eskom successfully. Eskom was confident that NERSA had applied the methodology. NERSA had taken into account key court decisions in coming up with this decision. However, although strides had been made to close the gap to cost reflectivity, it believed that there was a smaller portion still to continue. Importantly as well, over and above the price increase, it needed to look at the structure of the tariffs as the industry was changing. Eskom had taken the opportunity to put forward some proposals and suggestions. Eskom would engage with NERSA within its governance structures to try to close those gaps in tariffs structures and the opportunities that were available to NERSA and the country, regarding tariffs. The price increase awarded by NERSA in the 18%, a large component dealt with the correction of the regulatory asset base that was incorrectly computed in a previous decision. That had been fundamentally rectified. That adjustment had come through. It also dealt with the pass-through element of the IPP cost in terms of the methodology. NERSA had to understand and make a call on the timing of IPPs. One of the reasons for the difference between what Eskom had asked for and what was awarded was the delay in IPPs coming on-stream. They had been disallowed because of a timing perspective, which would always be rectified through a regulatory clearing account. Eskom saw this decision as applying the methodology. It was a very reasonable decision in tough circumstances. It had a positive impact on where Eskom was going financially, to relieve the pressure and focus on the operations. There were opportunities to align with the changing industry. Eskom made suggestions on the ringfencing of revenue and giving separate price increases for generation, transmission and distribution in the future.

Ms Hasha Tlhotlhalemaje, General Manager: Regulations, Eskom, briefed the Committee on the tariff increases for 2023-2024. The presentation detailed how NERSA was guided in its decision. The presentation discussed NERSA’s decision for the 2023/24 and 20/2425 financial years in detail and the year-on-year contribution to percentage price increases. The revenue determination translated into an average increase of `18.65% and 12.74% for the respective years. The presentation also detailed the continued journey towards cost reflectivity at revenue and tariff levels and Eskom’s progress towards financial sustainability. Eskom would receive debt relief of R256 billion over the next three years. There would be zero allowance for arrear debts in MYPD decision. Municipality arrears continued to increase annually. A New Municipality Circular was published by National Treasury to address arrears. The success thereof was yet to be determined.

(See Presentation)

Discussion

The Chairperson thanked Eskom for the presentation. The Chairperson invited the Members to make comments and ask questions for clarity.

Ms W Ngwenya (ANC, Gauteng) asked if the tariff increase was low in comparison to international standards. Had Eskom conducted an international study, especially in the African continent, to compare the tariff increase with their international counterparts? She asked for the Committee to receive an international perspective. Did the tariff increase play a role in influencing the public, especially the poor and the low-income households who were more vulnerable? What were the other affordable alternative sources of electricity which Eskom could advise poorer communities to explore? Did load shedding have an impact on Eskom’s sales of electricity? If yes, did it play a role in influencing Eskom’s decision to increase tariffs? To what extent had it influenced Eskom’s decision to increase electricity prices?  

Mr M Nhanha (DA, Eastern Cape) addressed the Deputy Minister. South Africans had a bit of a reprieve when the President persuaded Eskom to hold back on implementing the tariff hikes. It was clear that Eskom would implement the tariff increase. Did Government have a plan to mitigate the devastating effect that this would surely have, particularly on the poor? Had the Government thought of a plan to try and cushion the most destitute in the country? He addressed Eskom. One of the industry experts argued that Eskom had asked for a tariff hike so that Eskom could pay its debts. He further argued that Eskom could not find a way out of its debts other than pressing the already hard-pressed consumers. He wanted Eskom to provide comment on that matter. Many experts were arguing that the increase was to allow Eskom to get out of debt. When he first heard of the tariff increase he thought it was an April Fool’s joke. How could Eskom explain to South Africans that whilst the country was experiencing the severest of load shedding, Eskom wanted to increase prices? Was this not adding insult to injury? Eskom had failed in its mandate to generate and distribute energy for the country. Having failed, Eskom now slapped South Africans with such a huge increase.

Ms T Modise (ANC, North West) said that a few years ago there were reports that Eskom had signed long-term electricity deals with mining houses and industries. These deals were much cheaper than the general public. Some of the deals were signed before democracy. Did these deals still exist? If yes, what justified their existence? The public was buying at a high price when the mining houses and industrial customers were buying at the cheapest price. Did these deals still exist? Would the money recovered from the tariff increase enable Eskom to return to services at certain power stations to ease the rate of load shedding?

The Chairperson said that the country was approaching winter. Had Eskom taken any measures to mitigate load shedding during winter? He discussed the alleged sabotage which was said to be taking place in some of the power stations. Had a proper investigation been done on these allegations, including theft and fraud, which were affecting the performance of the utility? What was happening to the 25 people who were arrested earlier this year for the allegations of sabotage, theft and fraud? Besides strengthening Eskom’s balance sheet, how would the R256 billion from Treasury assist Eskom to carry out the energy mix policy of the Government, so that the country could get out of the quagmire of load shedding? He discussed the owed debts, particularly those from townships. Some of those debts predated democracy. There was a call for the scrapping of those debts in order to have a fresh start so that Eskom could see money flowing. He discussed a prepaid method where all households would be paying. There was a suggestion that there was an accumulation of that old debt. People were still not paying because of the method that was used. Was this feasible? If not, what was then the alternative? The Chairperson asked the Deputy Minister and Eskom to respond to the questions.

Deputy Minister Bapela responded to the questions on the old debt. After the 1994 democratic breakthrough, there was an engagement around the then debt to be scrapped. Over time with the ushering in of the new democratic dispensation of municipalities, which came in 1996, there was the scrapping of the debt by quite a number of municipalities across the country. There was now a new debt that had accumulated to almost R23 billion. The old debt that was scrapped came from Apartheid. People were encouraged to pay for their services and there were quite a number of programmes that were started. This was to try and introduce a culture of payment for services. South Africa was now in its 29th year of its democracy. After 24 years, unfortunately, a new debt had accumulated of R23 billion was owed by the municipalities to Eskom. SALGA had tried over the past three years to lobby for the scrapping of the debt, but the challenge was that if it was scrapped then money needed to come from somewhere. Where would that money come from? There were so many needs in the country. Someone was owed money, so it was not just easy to say that the debt was cancelled. If the budget allowed, then it meant that the fiscus needed to ring in that money from the system. Where would that money come from? That debate had not been concluded. So many meetings had been arranged to engage on it by the former Deputy President David Mabuza. There had been no conclusion on it as yet, but it kept on coming up on the agenda for revisiting. Up to now, there was no decision on the scrapping of the debt. There was also debt owed by Provincial and National Governments to Eskom. There was a task team that had been established under the then Minister of Public Works, Minister De Lille, who led a task team to ensure that all Departments complied and paid municipalities whatever was due to municipalities. In that R23 billion, there was money owed by Government Departments. This was besides households and the private sector. A number of Departments were responding and if they were not responding then the Departments needed to provide reasons why. He noted that there were a number of municipalities that were owed money. SALGA still had the power to use that tool. If Government did not move on reducing its debt then municipalities could switch off services. There were those discussions which had also taken place. Some of the Departments complained that the municipalities’ billing system was a challenge and that was why they were not paying. Some Departments complained that they were being overcharged. Departments also complained that their queries were not responded to adequately. This became a perpetual dispute because the municipality was not able to give answers to the Department that was querying the bill. Even some of the households that wanted to pay had billing queries that were there. The billing system in municipalities was still a challenge. Some were doing well, and some were not doing well in that particular context. Therefore, the issue of the debt scrapping was a combination of those who could afford to pay and be obligated, including Government Departments, but then there were the poorest of the poor. The discussion had not concluded. The IMC, which was chaired by Deputy President Mashatile, would have to raise this matter and follow up on it. This was a matter that was still pending. It was not yet resolved. It was on the agenda. There were quite a number of issues. Scrapping of the debt was an ongoing matter. Treasury asked the question of where the money would come from. He discussed the poorest not being burdened by the increases of Eskom. There was a programme for the indigent in all municipalities, which was a budget available to municipalities. There were municipalities that had a good indigent programme with all the residents registered to be exempted from a certain amount for services from municipalities, like electricity or water. That indigent policy was still in place. He was not sure of the figure now but there were billions in place. He came to Parliament last year and gave a comprehensive report to the NCOP in terms of how much and how it would help relieve the poorest of the poor. That package was a package still available. However, the municipalities were not updating their records. There were new people who had lost jobs recently and then there were also those who had gained jobs within that system. Municipalities were not updating their records. They were waiting for people to come to them. Awareness was not greatly spread to inform residents that if they were indigent and could no longer afford to pay for certain municipal services, they should register. With that register, the municipalities could then claim the money that was available in the system. The records were going down instead of going up. Yet it could be seen that the population of indigents were growing. That was the policy Government had in place to offset any increments that Eskom might have which might affect the poor. That amount of money remained available. Most of the time it was not being spent to the maximum because the local municipalities were not compliant with it. He encouraged municipalities to go on an offensive campaign and remind people that they needed to go to the municipalities. Municipalities needed to visit people in communities, townships and villages, and ask if they were an indigent-qualifying resident. Treasury was not making more money available because every year that money was not being fully spent. That was what the Government did to protect residents even when there was an increment by Eskom. Not everyone was in the indigent register of municipalities. Municipalities needed to push on this matter. This money was made available by Government.

Mr Makwana responded to the question about Eskom’s winter plan. The board and the executive had been engaged in various deliberations to see how it could ameliorate exposing South Africa to a tough winter. It remained in consultation with various key players. As soon as those consultations were done, Eskom would communicate with the country.

Mr Cassim responded to the question of whether Eskom had benchmarked South Africa’s tariffs relative to international peers and the African continent. Eskom had done that. It would make those reports available to the Committee. It had found that South Africa’s tariffs were still competitive with global benchmarks. He noted that with benchmarking, sometimes there were subsidies from the Government which then masked the overall price that consumers were paying. In the studies Eskom had available, it had found that South African prices still remained competitive. He discussed how the poor would be protected. When a certain sector of vulnerable customers was protected whilst the overall cost must still be paid and recovered from the entire population, it did mean that some of the other categories of customers picked up additional costs.

He discussed how to address that going forward as a country. There needed to be a clear cross-subsidy framework. It needed to be a Government policy-led initiative that states the framework around that and how it would be dealt with. That would give much more clarity going forward for the country. There were mechanisms to protect, that were announced by DMRE, in terms of industrial customers for the short term and long term. Eskom believed that there needed to be a clear cross-subsidy framework around that. He discussed whether Eskom took load shedding into account in terms of tariffs. When Eskom made its application to NERSA it ran certain calculations. With the combination of Eskom’s plants plus IPPs and imports, it looked to meet the demand. In its application to NERSA, it had made an assumption of a 12% load factor on its OCGTs ((Open Cycle Gas Turbines). NERSA had allowed for a 6% load factor. This kept the pressure on Eskom to improve its EAF (Energy Availability Factor) performance. After it did a regulatory clearing account after the event of load shedding had happened, it took an adjustment for that. It did not expect and had not submitted, for consumers to pay for any loss or failure that was linked to load shedding. Eskom had not done that, and those were the principles embedded in the MYPD methodology. He responded to the question of whether the price increase was only there to pay for Eskom’s debts. No, it was there to pay for Eskom’s operating cost, being primary energy, and ops and maintenance. It was also intended for Eskom to get a return on investments in terms of that methodology. It had to be the correct regulatory asset base as defined by the methodology, then that fair return that was determined by NERSA. NERSA’s targeted cost of capital was around 9%, whereas the amount that was allowed to be recovered in these tariffs was sitting around 1.7%. There was a gap to go. For Eskom to remove itself from being a burden on the fiscus and not asking for further bailouts going forward, it was a four-pronged approach for Eskom’s financial sustainability. One was the cost-reflective tariff, and it believed that it had made a massive step in the right direction. Two, was the debt relief to de-lever the balance sheet. It had done that now by the recent decision of the Minister of Finance. Three, Eskom needed to be efficient as an operator and a licensee. Eskom had done a lot but there was more room to do around its efficiencies. He noted the last challenge that currently remained regarding the finances of Eskom. The last challenge was the collection rate and improving the collection rates from municipalities. Treasury had issued a circular and incentive, as part of the debt relief. If municipalities paid their current account, then Eskom would write off the historical municipal arrears over a three-year horizon. He discussed the price increase and how Eskom would explain it to South Africans. It was unfortunate that the application was during a time when Eskom was struggling with high stages of load shedding. However, Eskom needed certainty on how it was going to pay for its operating costs, in particular outages that occur. Eskom also needed to expand its distribution and transmission networks. The price increase helped Eskom deal with the operating costs. NERSA had increased the percentage of low factor allowance on the diesel, from a previous 3% to 6%. Eskom was still budgeting for 12%, which it would have to finance through a portion of cash generated from its operations. The importance of getting the transmission grid expanded as quickly as possible should not be underestimated. Then Eskom could connect the IPPs and the other capacity that came online. He noted that in Big Window 5 transmission had become a constraint. Unlocking the transmission grid was key to ensuring a much more stable secure supply of electricity to the country. Eskom believed that the tariff decision and the debt relief would go a long way. However, it took some time to fix the old plants and get them to perform. Then those long-term outages, Kusile 1, 2 and 3 and Koeberg, would take a few months to bring onto the grid to deal with the supply and demand balance. He responded to the question about whether the tariff increase would decrease load shedding. It would not reduce load shedding in the short term. However, Eskom believed that the increase would put it on a path to addressing the key issues. This would free up management’s time to not stress about raising money in the markets to meet debt service commitments. Management could now focus on the operations, the people and the processes within Eskom.

He responded to the question about the alleged sabotage and the 25 people. Many of those cases were pending trial. No one had been convicted yet. Some cases had been withdrawn.

Mr Martin Buys, Acting Chief Financial Officer, Eskom, said that Eskom had three pockets which it could get funding from. The one was the revenue stream itself. The revenue stream was there for the company to cover its operating costs and it needed to recover return on assets. The other revenue stream was by borrowing money from the external market. Or the shareholder could put money into the business. He discussed why the bailout was necessary. Eskom’s balance sheet could not carry the burden anymore. The only option available was for the shareholder to put money into Eskom. The revenue was determined by NERSA. NERSA followed a formula for determining the revenue. It was a basic formula consisting of operating costs, primary energy, or depreciation, and then return on assets. That was outside of Eskom’s control.

Ms Tlhotlhalemaje discussed the protections Government had put in place to protect poor residential customers. There was an electrification programme that was being undertaken. It was still continuing. It was a Government initiative. There was a substantial amount of funding put into that. There was also the free basic electricity of 50KW hours per month that poor residential customers received. In certain municipalities, it was actually increased to 100KW hours per month. She discussed the inclining block tariff. The first batch of electricity that was used would be at a cheaper rate. Only when a resident went at a higher rate would the resident be paying more. Most of Eskom’s residential customers utilised less than 100KW hours per month. That was because they had very few electrical appliances. There is also a further subsidy that has been provided for poor residential customers by NERSA in its recent decision. The poor would not be affected by this increase. Many residential customers got electricity from municipalities. There was a differentiation between Eskom’s tariffs and municipality tariffs. In Eskom’s research, it found that there was quite a difference. That was another area of focus. There had been a recent court case where it was incumbent upon NERSA to ensure that the tariff municipalities charged must be based on the cost to supply those particular customers. At the moment it was just a benchmark increase that was provided. Besides Eskom supplied customers, people also needed to think of the municipal supply to customers. Eskom felt that more work was needed there.

Deputy Minister Bapela said that the President expressed a wish for relief and suspension of implementation at the time. Unfortunately, later he had been disappointed. In law, the President had no space to challenge the positions of an independent body, such as NERSA. However, it was a human sentiment that had been expressed because of the high cost of living, and the global and local environment. That was why the President asked for a suspension for later implementation. Based on legal advice it was found that a legal body had made a pronouncement. This was how the architects of the South African democracy protected those independent institutions. He noted that money was available in municipalities for indigents, but that most of the time the money was just waiting for applications.

Mr Monde Bala, Group Executive: Distribution, Eskom, discussed the special pricing agreements. This framework was done in line with the policy pronouncement by the Department of Trade and Industry. It developed a framework, specifically looking at the strategic sectors of the economy. Eskom had some of these special pricing arrangements. This process culminated with NERSA having to approve whatever rate a specific entity would be paying per unit. Eskom processed those and submitted them to NERSA for approval. All of the pricing arrangements were approved by NERSA. Eskom was in the process of evaluating a couple more. The Department of Trade and Industry would then make a determination.  

The Chairperson thanked the Deputy Minister and Eskom for their answers. Some of these matters would not be exhausted today. The Chairperson asked Members if they had any follow-up questions.

Ms L Bebee (ANC, KZN) asked if Eskom’s application for the tariff increases took into consideration the availability of free basic electricity to qualified households. Did the free basic electricity threshold increase in accordance with inflation? What was the impact of cable theft and illegal connection on Eskom’s finances? Did this have an impact on the application for the tariff increases? 

Mr Nhanha said that he accepted the Deputy Minister’s explanation as far as the indigent were concerned. In the indigent policy a household needed to earn a certain amount. If they earned below a certain amount, then they then qualified for indigent funding. He noted the high cost of living and inflation, which was partly impacted by the situation in Russia. The category of people he was speaking about was a working-class family. They earned more than the indigent threshold amount per household. The difficulty was that as much as working-class families earned more than the threshold amount, the value of their income was diminishing because of the high cost of living. What mitigating plans were in place to try and protect those kinds of people?

The Chairperson said that sometimes things were taken for granted given the state of things happening in other SOEs. Members waited until it was too late to ask the question. There were people who suggested that one should not be surprised if the total collapse of the grid would happen. Was this something that could be expected to happen? He asked if Mr Makwana could provide the Committee with an assurance that that scenario would not happen. He asked if Mr Makwana could give the nation an assurance that the financial health status of Eskom was in good standing in spite of all the challenges of load shedding. He wanted to know if Eskom was on the brink of telling the Committee that it did not have money for the future to buy coal, to buy diesel and other related essentials. The Committee wanted assurance on those two matters.

Deputy Minister Bapela thanked the Members for the useful questions. He noted the concerns Members raised about the poor. He noted the concerns about efficiency and security of energy. The work was being done so that at some point in the future the country could be out of the current situation. The Members rightfully expressed concerns about issues of security of energy. It needed to be ensured that the programme was implemented and that Eskom was able to achieve its intended targets. The increment was obviously hurting customers. He noted that Eskom adequately dealt with the issue of the Government protecting poor customers. He noted international benchmarking and comparison. Eskom would be able to provide a detailed report to the Committee. It would detail out of the third world countries, which countries had the more expensive tariffs. Situations differed from one country to the other. The government did not want to hurt the poor, but it needed to be seen that electricity prices in South Africa were not as bad. The cost of producing was also something that could not be undermined. The cost elements dictated the price offer. If there was an abundance of other mix of energy that would also impact the cost of producing to be less. The rearrangements would always be there. The South African situation always needed to be taken into account. The levels of inequality were high. Unemployment was high. Poverty was high. These triple challenges needed to be looked at and how many people were affected by them so that the Government did not add to the pain. However, Eskom needed to be run so that it could sustain itself. He hoped the country reached a stage where it was a better place for all. He had hope for the future of the energy mix and renewables that were slowly coming into the stream. He noted the capacity of Eskom now that there would be unbundling. There would be more focus on transmission. Municipalities would play more of a role in distribution. He hoped that these things would take the country out of the current difficult environment into a better situation.

Mr Makwana said that Eskom had responded extensively to the first two questions asked by Ms Bebee. He noted that executive members may add additional points where necessary. He responded to the question of grid collapse. The whole purpose of load shedding was to prevent grid collapse. If Eskom sat and did nothing, then that was where the risk would occur of having a grid collapse. Eskom had load shedding to prevent a total grid collapse. He did not think South Africans should be worried about there being a total grid collapse. He discussed the interventions taken by Treasury on the debt relief. The debt relief had placed Eskom on a solid path to fulfil its obligations to fast-track the strengthening of the transmission grid to open up opportunities for more players. The debt relief also put Eskom on a sound footing to begin to restore the utility’s credibility in markets, especially its credit rating. It also allowed Eskom to have an annual audit year to year and not have to worry about going concern issues. The board, especially through the investment and finance committee, was now able to make smarter decisions to strengthen the income statement and balance sheet. The debt relief over the next three years and the increased tariffs, as unpalatable as it was, was aimed at ensuring that Eskom was on a sustainable financial path.

Mr Buys responded to the question about cable theft and its impact on Eskom. There was a direct cost impact as a result of the cable theft. Eskom also lost revenue, because it first had to fix the cables and then it could start getting the revenue by providing the electricity. He discussed the issue of people bypassing meters, tampering with meters or connecting to the system irregularly. Eskom had done a calculation. It was a conservative calculation. It was much worse than that. Eskom’s calculation showed that the impact was about R2.4 billion per annum. Eskom was in the process of doing a new calculation. It was only an estimate that Eskom could do at this time. He discussed how this impacted the revenue application. Eskom then calculated its sales, and it took into account these losses. The losses were included in the revenue calculation for NERSA.

The Chairperson said that Eskom should apply itself thoroughly to the comments and questions raised by Members. This would not be the last engagement. The Committee would continue to engage with Eskom. He thanked the Eskom for its appearance before the Committee and briefing the Committee. The concerns raised by Members were actually the concerns of the citizens of the country. The increment was a worrying factor. This increment was a little bit too high given all the challenges in the country. The triple challenges of inequality, unemployment and poverty. The challenge of load shedding made it difficult for Eskom to have a justification. He noted that the matters might be at a level where they were irreversible, but decisions were taken by people. If need be, those decisions could be reviewed by the very same people who had made them. He thanked the Deputy Minister for appearing in the meeting. He hoped that this would continue to be the culture that prevailed in the Committee. The Committee had not yet met the new Minister. The Committee would like to meet with him on the ground in the course of the Committee’s work. He thanked Mr Makwana for always being available and ready to engage. He appreciated the management of Eskom being available in the meeting. He noted that Eskom needed to focus on rural areas as well. There needed to be meaningful participation of the rural communities so that there was a balance of the resources in the country. The services given to citizens should not be an issue of urban versus rural. South Africa was one country. South Africans needed to receive opportunities equally.

The Chairperson asked the Deputy Minister if he wanted to make concluding remarks.

Deputy Minister Bapela said that he delivered his closing remarks earlier. He would communicate with the Minister that his availability for future Committee meetings was critical. If the Committee made oversight visits on the ground, then the Ministry would try its best to receive the Members as they did their oversight.

Consideration and adoption of minutes
The Committee considered the minutes of the meeting of the Select Committee on Public Enterprises and Communication dated 22 March 2023.

Ms Modise moved for the adoption of the minutes.

Ms Bebee seconded the adoption of the minutes.

The minutes were adopted by the Committee.

The Chairperson thanked the Members for their deliberations with Eskom. He appreciated the Members’ commitment to attend meetings. Today had been a good engagement as Members had dealt with matters that were critical in the nation and the expectation of South Africans.

The meeting was adjourned.