S.Africa power firm Eskom cuts price hike request

* Original price request criticised for inflation impact * Revised tariff to increase Eskom's funding gap * Regulator says decision on increase due on Feb. 24 By Muchena Zigomo JOHANNESBURG, Dec 1 (Reuters) - South Africa's state-owned electricity company Eskom has cut a price hike request to 35 percent from 45 percent a year over the next three years, but the struggling utility says this will leave it short of cash. The central bank had warned of the inflationary impact of a 45 percent electricity price rise, and Eskom was criticised by the ruling African National Congress, industry and trade unions in Africa's biggest economy. The utility, which is recovering from a leadership struggle last month that cost the jobs of its chairman and chief executive, has said it needs the price rises to pay for a 385 billion rand ($50 billion) supply expansion programme to cope with rising demand. Power outages early in 2008 crippled mines in South Africa, the world's top platinum and major gold producer. Eskom said on Tuesday it would be hit by a 14 billion rand ($1.89 billion) cash shortfall in 2011/12 and a 7.9 billion rand shortfall in 2012/13, and that it would look at increasing borrowing, and introduce private equity "as soon as possible". Eskom's acting Chairman and Chief Executive Officer Mpho Makwana said Eskom would seek 20 billion rand in new equity. Makwana said the trimmed price hike would increase the utility's borrowings by 8.5 billion rand over the next three years, and would also increase the country's risk profile and vulnerability in terms of electricity supply. "Increasing borrowings by 8.5 billion rand over three years and bringing in 20 billion rand new equity will also contribute to lessening the shortfall," the utility said. Eskom has said it would rely on borrowing from capital markets and government loans to fund its expansion programme. Ferrochrome producer Hernic Ferrochrome said the 35 percent price rise was still too high. "This is in line with expectations. However, the 35 percent is still a big increase and it will have a serious impact on our businesses," Hernic Chief Executive Tetsu Kotaki said. Standard Bank economist Danelee van Dyk said the price rise could still lift inflation. "Generally a 35 percent increase would add 0.6 percentage points to consumer inflation," Standard bank economist Danelee van Dyk said, which would be about 0.2 percentage points less than a 45 percent rise. "It is fairly large but it doesn't make much of a difference to the yearly average. But if it is sustained over 3 years it will have an impact on second round effects and that is difficult to quantify." Thembani Bukula, a senior official of the National Energy Regulator of South Africa (NERSA), said a decision on the tariff request would be made on Feb. 24. (Additional reporting by Gordon Bell and Shapi Shacinda)