The 2c/kWh tax on electricity generated from non-renewable resources would be implemented starting July 1.

The tax, which was first suggested in the 2008 Budget by the Minister of Finance at the time, Trevor Manuel, was initially delayed, but would now come into effect, confirmed National Treasury spokesperson Lindani Mbunyuza.

The Chamber of Mines had made submissions to the National Treasury to have the implementation of the tax further delayed, without success.

In the 2008 Budget, the National Treasury said that the tax was to be collected at source by the producers/generators of electricity. It would then go to the South African Revenue Service.

“This measure will serve a dual purpose of helping to manage the current electricity supply shortages and protecting the environment. This measure is expected to raise about R4-billion per year,” the Department said previously.

South African electricity utility Eskom generated about 94% of its total electricity output by burning coal. About 4% was nuclear power, a small amount of diesel-fired open-cycle gas turbines, and a miniscule amount of power was generated from wind.

The National Treasury added that the introduction of this tax would be complemented by incentives that encourage firms to behave in a more environmentally responsible manner.

Tax incentives to encourage the uptake and development of renewable energy, such as accelerated depreciation allowances are already in place and, the National Energy Regulator of South Africa recently announced the renewable energy feed-in-tariff, which was viewed positively by the renewable energy industry (wind, hydro and landfill gas).