Eskom forces drug firm offshore

Cape Town - Pharmaceutical firm GlaxoSmithKline (GSK) told energy regulator Nersa on Wednesday rising electricity prices have swayed the firm to move some of its production to India.

Speaking at Nersa's public hearings into Eskom's proposed tariff hike of 35% per annum for three years, GSK representative Devan Pillay said the pharmaceutical group had decided to move the production of its drug for the treatment of Elephantiasis (a disease characterised by the thickening of the skin and underlying tissues) from its Western Cape factory.

The drug is being supplied at cost to the World Health Organisation. According to Pillay, India offers GSK a total saving of 3% over South Africa.

"To justify a facility in South Africa with the predicted electricity increases has become more and more difficult," Pillay said.

"The Bric [Brazil, Russia, India and China] countries always have the advantage of cheap labour. South Africa's advantage was always cheap electricity. The 35% increases will create an artificial recession in South Africa at a time when it's absolutely not needed."

'Tax the wealthy'

In another presentation, Cosatu's provincial secretary in the Western Cape, Tony Ehrenreich, told Nersa that Eskom's funding shortfalls should be financed by slapping more tax on wealthy people.

"The funding must come from the money that the wealthy have stolen from this country." Ehrenreich said.

Accusing Nersa of having already decided to grant Eskom its application and merely "carrying out the motions" of public hearings because it was required by law, Ehrenreich warned the proposed tariff increase would effectively shut down a significant portion of the country's manufacturing capacity.

"The proposed increase more than doubles the price of electricity over next three years.

"If you see how communities are battling already, it is inconceivable how they're going to manage. There has to be a different approach," said Ehrenreich.

Eskom chairperson Mpho Makwana was adamant that if the increases were not granted, the country would face unreliable, insufficient and economically debilitating electricity supply.

- Fin24.com