EEC’S E6 MILLION PAYMENT FOR SAME JOB

MBABANE – The Eswatini Electricity Company (EEC) has made a payment of E6 million for the same job of compiling the controversial Efficiency and Optimum Financing Structure Studies (EOFSS).

This revelation comes at a time when emaSwati await the Eswatini Energy Regulatory Authority’s (ESERA) decision on whether to increase tariffs by 52.57 per cent. ESERA is expected to announce its decision on the tariff increase by February 1, 2025, with the new rates potentially taking effect on April 1, 2025. Investigations by the Times SUNDAY have revealed that EEC paid E3 million to a company that allegedly produced a questionable study, which the company rejected.

Questionable

According to sources, the rejection came at full cost because the company was forced to pay for the study, which was deemed not good enough by the entity. Investigations have revealed how the country’s electricity company, after rejecting the study, then hired another company to conduct the same and paid a similar amount.

This answers the question of why the company failed to meet ESERA’s 12-month deadline. It also brings to question the issue of efficiency, which one of the studies seeks to evaluate in the entity’s operations. The studies are crucial to the regulator, because they will be used in consideration with public submissions to determine an appropriate tariff increase to be awarded to EEC.

Meanwhile, EEC has applied for a significant tariff increase, requesting a cumulative 52.57 per cent hike in electricity rates over the next two years.

Expansion

This includes a 25.51 per cent increase in 2025 and an additional 27.06 per cent in 2026. The increase is part of EEC’s effort to raise E8.7 billion, primarily for electricity purchases from suppliers and to fund operations and expansion. However, the application has faced controversy due to EEC’s failure to meet the deadline for submitting two critical studies required by the Eswatini Energy Regulatory Authority (ESERA): The Operational Efficiency Study and the Optimum Financing Structure Study.

EEC missed the March 2024 deadline, submitting the studies just before the public consultation process on the tariff hike. The late submission of these studies raises concerns about EEC’s operational efficiency and financial management, with some experts arguing that the delay undermines the justification for the proposed tariff increases.

Terminated

Meanwhile, according to impeccable sources EEC initially hired a company of Indian origin to carry out the studies, but abruptly terminated the contract while the project was still underway. The company was then forced to pay a settlement fee of E3 million following the cancellation. Subsequently, EEC hired another company to perform the same task, resulting in duplicate expenses and further delays.

According to sources close to the matter, the cancellation occurred just a few months before the ESERA submission deadline. ESERA had instructed EEC to undertake these studies as part of the conditions tied to a tariff increase awarded last year. The studies were intended to guide future tariff determination applications by EEC.
Despite these instructions, EEC’s decision to cancel the initial contract and its subsequent failure to meet the deadline placed the company in a precarious position.

Settlement

The missed deadline coincided with EEC filing a separate application with ESERA to raise E8.7 billion from the public, primarily to fund electricity purchases from suppliers. Information obtained by the Times SUNDAY indicates that after the contract was terminated, the contractor challenged the decision. This led to the E3 million settlement before EEC engaged a second company for the studies.

The decision to cancel the initial contract, pay a hefty settlement and hire a second contractor has raised questions about the company’s internal processes and its ability to meet regulatory requirements efficiently. The implications of these delays on future tariff adjustments and the company’s financial stability remain to be seen.

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