…objection to tariff hike will affect the 180,000 customers

The Swaziland Electricity Company (SEC) has noted with great importance the public reaction to the new tariff increase announced by the Swaziland Energy Regulatory Authority (SERA) recently.

In fact, SEC reverently regrets that the regulator’s verdict seems to have caused discomfort to some electricity users. It is in this spirit that we take the opportunity to enlighten those who regrettably may still not be aware of the reasons advanced by our company when applying for the tariff increase.

In November 2016, SEC applied for an average of 20.19% tariff escalation and was awarded an average tariff increase of 15% about a week ago. Even though SEC has not been awarded its preferred tariff, we wish to take this opportunity to extend our appreciation to SERA for successfully undertaking the adjudication exercise. We acknowledge that it is not always possible to produce an outcome that will please all the parties concerned. In this particular instance, SEC would definitely have appreciated a 20.19% average tariff increase. On the other hand, some customers would be happy with far less or probably no increase at all.

A lesser increase to affect customer service

That being the case, SEC’s is of the humble view that an average tariff increase of less than 20.19% is at the detriment of the decent customer service that the company is making every effort to provide at all times. It is an undeniable fact that the excellent customer service anticipated from an entity of SEC’s calibre with a customer base that is growing at an alarming and unprecedented rate daily, comes at a huge cost to the company. Adequate, efficient, competent and contemporary resources have to be in place. These resources include, among others, highly-skilled employees, adequate stock supplies, fit for purpose and well-maintained transport, modern technology and infrastructural expansion. Currently, SEC has close to 180,000 customers and these have grown exponentially from less than 100,000 in 2012. The growing customer base is powered by the rural electrification programme supported by the government through Micro Projects, the Rural Development Fund (RDF) and aid from the Republic of China on Taiwan. The swelling customer base comprises mainly domestic customers, who are expensive for SEC to maintain. Invariably, big commercial and industrial customers require less of SEC’s attention and that translates to less maintenance and operational costs. The latter pay more for electricity to subsidise the domestic customers.

Domestic Customers’ Tariff is actually less

In simple terms, the domestic customers’ tariff is presently 41% less than what they should be paying and this cost is being borne by the commercial and industrial customers. As a result, SERA desires to have this inequity addressed going forward because it is straining businesses.

SEC is empathetic to the public outcry against the awarded tariff rise, however any less of an increase would render SEC unsustainable and further jeopardise the economy. This is SEC’s view based on the following;

  • Between December 2016 and January 2017 SERA gave the public unlimited opportunity to voice their opinions on SEC’s application. It must be noted that most stakeholders failed to attend the public hearings and in some instances the sessions had to be cancelled due to non-attendance. These hearings had been widely publicised by SERA. Those who attended had their concerns and compliments noted by SERA and were considered when coming up with the verdict. Prominent among those who did not attend were opinion-makers and both big and small customers. SEC would have appreciated to present its reasons for the application to bigger crowds.
  • SEC notes with concern that some customers believe the price of electricity should not go up. This is not a viable option as the costs of running the utility are growing daily. This is caused, primarily, by the fact that our country does not have enough electricity generation capacity. About 80% of the power we use is imported from neighbouring countries. Every effort is being made to build extra power stations and appreciatively this has full support of the government.
  • The drought experienced in the last two years has hit SEC hard. For the first time since the company’s birth in 1963, internal power generation was halted for the better part of 2016 due to lack of water to turn the turbines. Every watt of electricity had to be imported; sometimes at more than double the normal price. As a result, SEC spent an unbudgeted E198 million to buy additional power from outside our borders.

  • SEC employees are not paid excessively high, and the pay scales used to remunerate them are guided by the Public Enterprise Unit (PEU) circulars. Most SEC employees have had salary cuts, and increments have been frozen for more than three years. Contrary to what most people believe, SEC employees no longer have the benefit of free electricity. All these factors have resulted in the company losing critical skills and talent.
  • The fact that the country does not manufacture anything related to the electricity infrastructure subjects our restricted resources to all sorts of currency fluctuations. Most of the equipment we use come from countries on the continent and beyond. Even simple items such as bolts and nuts are not being manufactured locally and have to be procured from other countries.

We realise that electricity is a grudge purchase, hence it is unlikely that there will ever be a time when a tariff increase by any margin will get overwhelming approval from the public. As correctly pronounced by the regulator last week, the verdict was taken in the best interest of the consumers, SEC and country. SEC belongs to every Swazi citizen, therefore we are all expected to support the utility in its efforts to remain sustainable and efficient in service delivery. Let us remember that this company is critical for social and economic development.

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