* Seeks 16 pct a year over 2013-2018
* Increases to pay for new plants
* Rand, bonds show little reaction
(Adds reaction)
By Olivia Kumwenda
JOHANNESBURG, Oct 22 (Reuters) – South African power utility
Eskom has applied to more than double the price of its
electricity over the next five years, a move that will deal a
heavy blow to industries where margins are already under
pressure.
The state-owned utility said it has applied for a 16 percent
annual increase for five years from April 2013 to March 2018,
comprising a 13 percent annual hike for its own needs and a 3
percent rise to support the introduction of independent power
producers.
Eskom was awarded price hikes averaging 25 percent annually
in the past three years and energy-intensive users, including
the vital mining industry, have long said the steep increases
were making some of their operations unsustainable.
“It would be a big blow to the development of South African
industry. If it gets approved, it would be a problem,” said
Kevin Lings, chief economist at asset manager Stanlib.
A wave of strikes in South Africa has forced companies to
increase wages, which along with steep increases in raw material
costs and power prices are cutting into profits.
Continued…
