- Several organizations have taken up arms over the large electricity rate increases awarded to Eskom over the next two years.
- Many have emphasized that the increases do not address the root causes of the problems at the utility.
- Eskom said that the increase will contribute positively to its finances.
- For more financial news, go to News24 Business Cover.
From disappointment to outrage, there has been a litany of reactions in response to the decision by the National Energy Regulator of South Africa (Nersa) to grant Eskom tariff increases of 18.65% and 12.74% over the next two years, respectively.
Eskom said the decision will “positively contribute” to the utility’s financial sustainability, though it also acknowledged the pressure it will put on consumers.
The Energy Intensive Users Group South Africa (EIUG), whose members account for more than 40% of electricity consumption in South Africa, expressed concern that SA electricity prices are increasingly out of line with competing countries, and that high annual increases like these will leave local industries uncompetitive.
Although “disappointed” with Nersa’s decisions, the group acknowledged that it was a difficult decision to make.
“Nersa did not have much room to move considering Eskom’s challenging financial and operational position. In this regard, EIUG expects, for certainty and price stability, that the decision is legally compliant and final and stands,” the organization said.
Electricity costs outpace inflation
The South African Minerals Council, whose members consume around 30% of Eskom’s production, says the tariff increases that have been announced will increase mining industries’ electricity costs by R13.5 billion by the end of 2024.
“Since 2008, the price of electricity for the mining industry has increased eightfold, while consumer prices, measured by the Consumer Price Index (CPI), have only doubled,” the Council said.
The fee increases “fundamentally change intermediate cost structures in mining,” said the council’s chief economist, Henk Langenhoven.
The Consumer Goods Council of South Africa (CGCSA) also said the fee increases, while aimed at improving Eskom’s financial situation, will add more operating costs to companies in the consumer goods sector already struggling with the financial impact. of load reduction.
“CGCSA is calling for greater operational stability and efficiency at Eskom by ensuring that it accelerates plans to restore generation capacity and improve electricity availability. Tariff increases must be accompanied by a demonstrated commitment to effectively address the issues that Eskom is facing,” the Council said. saying.
‘Addicted’ to climbs
Cape Town Mayor Geordin Hill-Lewis called the massively above-inflation price increase of 18.6% “unfair, unaffordable and unfair”.
Eskom has alternative ways to raise funds, by cutting its payroll, weeding out suppliers who overcharge, especially for low-quality coal, and ending corruption, including recovering state-sequestered loot, Hill said. -Lewis.
A statement issued by labor federation Cosatu echoed these sentiments, arguing that rate increases are not a viable solution to the utility’s problems.
“The energy company has become addicted to them and has so far failed to come up with any tangible financing model for itself,” the confederation said in a statement. “These increases only serve to rob workers of their meager wages, stifle businesses and deny the economy a chance to reduce unemployment.”
READ | Eskom’s tariff hike could force some South Africans to choose between energy and food, lobby warns
Gerhard Papenfus, chief executive of the South African National Employers Association, added: “We refuse to accept that a raise is the solution to Eskom’s problems, as the extra revenue will continue to flow to corrupt people and incompetent municipalities who refuse to pay your bills with Eskom”.
The outstanding debt, owed by municipalities and other consumers to Eskom, currently stands at R55 billion and is growing.
a luxury item
The Organization to Undo Tax Abuse (OUTA) said Eskom remains in deep trouble and noted its “outrage” at the government’s failure to help South Africans weather this storm.
“Customers can’t afford current prices, which starts to bring electricity closer to the realm of a luxury item,” said Liz McDaid, OUTA’s parliamentary and energy adviser.
The decision to raise rates, McDaid said, comes against a backdrop of months of severe load shedding, economic stagnation, high unemployment, massive customer debt to Eskom and the government’s inability to provide municipal debt solutions. Treasury solution to Eskom’s R400 billion debt problem is also expected, he said.
The South African Federation of Trade Unions (Saftu) said rising electricity prices would “devastate the budgets of the poor and workers” and could mean some people could supplement their electricity supply with firewood, coal, paraffin and wood stoves and heaters. gas. – Cheaper alternatives in the short term, but that “would create indoor air pollution, much more expensive for health in the medium term.”
Western Cape Premier Alan Winde said the Western Cape Energy Council has pledged to look at all options to increase alternative power generation in the province. “To promote our economic recovery, protect small businesses and help individual citizens… We need to become independent from Eskom and energy resilient,” he said.
