South Africa’s Finance Minister Trevor Manuel announced the introduction of a new tax, or levy, that will be added to electricity sales coming from nonrenewable sources. The minister said the tax/levy rate has been set at 2c/kWh.
The National Treasury will be responsible to collect the levy at source from the electricity generators such as Eskom and other independent power producers. It is hoped that R2 billion will be collected over the 2008-2009 financial year, and R4 billion in subsequent years.
Seeing as most of South Africa is powered by fossil fuels such as coal, gas, and oil, most consumers will feel the pinch of the new sales levy. The move should serve to lend impetus to further develop South Africa’s fledgling renewables sector. Numerous biofuel projects are already underway but they are only sustainable on a smaller scale. Projects in solar power, wind power, and small-hydropower stations should begin seeing the benefit of research and investment in the nearer term as the country looks to solve its power crisis.