Earlier this week, the National Energy Regulator of South Africa (NERSA) rejected Eskomâs application for a 19.9% increase in electricity tariffs - instead only granting a 5.23% increase. This is a big win for consumers.
Hmm, Go On?
NERSA regulates the energy industry in accordance with national laws, policies and standards. Besides setting the cost of electricity, it also oversees piped gas and petroleum and is in control of issuing licenses, monitoring compliance with laws and setting regulation. Fortunately, NERSA is independent of government and it's only made upÂ of nine members.Â
What About Eskom?
Eskom is again at risk of losing its status as aÂ going concern* unless it receives the ~R67 billion additional revenue it's seeking. Eskom has been in this position many times before, with the most recent in late 2017Â where it postponed the release of its financial statements until it had enough support to continue on as a going concern.
NERSAÂ setting electricity tariffsÂ essentially sets what Eskomâs revenue will be for the next few years. Faced with the shortfall in revenue, Eskom has also proposed 0% wageÂ increases for the company's employees. As expected, this has resulted in mass calls to strike. Unfortunately, employees at Eskom are classified as essential services andÂ are legally prohibited from striking.
How do I Benefit?
According to StatsSA, electricity has a 3.75% weighting in the determination of inflation - so that means everything you buy is affected. Between 2010 and mid-2014, the effect of rising electricity costs on inflation was clear. During this period, the electricity component of inflation increased 76%, seeing inflation increase 28%. Letâs hope NERSA continues to consider the consumers' wallet when setting these tariffs.
By the Numbers ~R795 million The amount owed by Zimbabwe to SAA. Airline tickets to Zimbabwe are booked and then held in a Zimbabwean bank account with SAA unable to bring the funds home.Â Zimbabwe is experiencing a foreign currency crunch, resulting in a blockage of funds leaving the country.
Blocked airline funds are not uncommon - by the end of 2017, the International Air Transport Association reports that the funds blocked across borders totalled ~R65 billion. Venezuela is the biggest culprit, holding ~76% of all blocked funds.
No Dice The FIFA World Cup will not be coming home to Africa in 2026 (cue tears). Morocco lost out to a combined bid by the USA, Canada and Mexico â making it the first time a soccer World Cup will be co-hosted by three countries. The 2026 World Cup will also be the first expanded tournament, with 48 countries participating as opposed to the traditional 32.
An unspoken part of these tournaments is the cost incurred by the host countries. Check out this infographic we made showing how much the event has costed previous hosts.Â
Term of the Day* Going concernÂ - a business that is operating and making a profit. The opposite of being a loss-making business that cannot continue to operate.
Today's Take-Aways Electricity prices in SA are approved by an external body to avoid cost inefficiencies within Eskom.