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Eskom tariff a boon for business

Feb 28 2013 19:27 Sapa

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Johannesburg - The Steel and Engineering Industries Federation of SA (Seifsa) has welcomed a decision to limit the electricity price rise to 8% over the next five years.

"Seifsa members are confronted with the price sensitivity of international markets and have to be ultra-sensitive to maintain their competitiveness," it said in a statement on Thursday.

"This will protect the erosion of their ability to compete, to a degree."

Earlier in the day, the National Energy Regulator of SA (Nersa) announced in Pretoria that it had opted for eight percent instead of the 16 percent asked for by Eskom.

Seifsa senior economist Henk Langehoven said the debate around the price-determining mechanism highlighted the uncertainty within Eskom's decision-making model.

"It fortunately also brought to the fore the results of business putting its collective mind to the problem and highlighted alternatives to asset evaluation methods," he said.

"This result shows that these inputs carried weight and influenced Nersa's decision."

He said Nersa should ensure the coming increases were not nullified by local authorities and municipalities' own price-setting practises.

The federation hoped price determination processes at other public entities would be lower, with improved decision making.

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nersa  |  eskom  |  seifsa  |  electricity tariff hike

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