Sacci gets tough with Eskom

Johannesburg - The South African Chamber of Commerce and Industry (Sacci) said on Thursday that the majority of its members had indicated in a recent survey that the only level of increase in electricity tariffs that they could accommodate was inflation plus 3% to 5%.

Sacci presented its views on Eskom's multi-year tariff increase to the National Energy Regulator of South Africa (Nersa) today.

In its presentation Sacci highlighted the need to realistically consider all input and operational costs.

It referred to a survey that it had carried out among its members the majority of whom had responded that the level of increase that they could accommodate was inflation plus 3% to 5%.

Sacci pointed out that conservatively, inflation was likely to increase by approximately 0.3% which would put inflation outside the target range of 3-6%.

It is estimated that approximately 500 000 jobs would be lost. The ripple effect would be reduced personal disposable income and therefore household consumption expenditure.

Sacci estimated that the overall loss to GDP would be about R200m on the most conservative basis.

Sacci proposed that the provisions in the National Energy Policy be implemented with the introduction of private participation in generation being fast tracked.

The chamber recommended that Eskom be granted an inflation related increase for the period 2010/11, and that this period be used to develop a strategy that will provide South Africa with a sustainable electricity supply at a reasonable tariff.

Sacci announced that it had already started a process whereby stakeholders will be involved and had convened a colloquium that would take place in Johannesburg on February 2.

Eskom satisfied with S&P rating

Standard and Poor's (S&P) has affirmed Eskom's Local Currency rating at A- and its Foreign Currency rating at BBB+. This brings to an end the uncertainty created by the CreditWatch status. Both hold a negative outlook which is reflective of that of its shareholder, the Republic of South Africa.

Mpho Makwana, acting chairperson of Eskom, said: "We are satisfied that the rating is reflective of the critical role of Eskom to the South African economy. The resolution of the CreditWatch status also recognises the progress made by Eskom in conjunction with its shareholder to stabilise Eskom's credit profile particularly in the context of the current build programme. We are optimistic that in its determination the National Energy Regulator of South Africa (NERSA) will take these concerns raised in the S&P review into consideration."

- I-Net Bridge