South Africa’s power supplier Eskom Holdings Ltd. generates nearly all the nation’s electricity at some of the world’s cheapest rates. That arrangement has allowed global mining giants to extract vast amounts of gold, platinum and coal from South Africa’s earth and to keep electricity affordable for the poor.

But the state-run utility says artificially low electricity rates have left it with dangerously low generating capacity, leaving the country vulnerable to power cuts.

It is proposing raising tariffs 35% annually in each of the next three years—current and former Eskom executives warn anything less will threaten the company’s ability to provide a steady supply of electricity.

The proposal has brought a barrage of criticism from politicians and consumers, fanning concerns about inflation and imperiling the recovery of Africa’s biggest economy. On Wednesday, government regulators are set to decide on its rate-increase proposal.

Via: WSJ