Johannesburg -
Eskom's proposed tariff hike could delay the country's economic
recovery, Business Unity SA (Busa) CEO Jerry Vilakazi said in
Midrand on Thursday.
"If the 35 percent increase is accepted by Nersa, we can wave
goodbye to an immediate recovery for South Africa's economy," he
told a public hearing, organised by the National Energy Regulator
of SA, on the proposed tariff hike of 35 percent every year for the
next three years.
While Eskom's proposed tariff hike would bring in R18.2bn for the first year for the parastatal, the cost to the country's
economy would far exceed this amount. In the same time frame, South
Africa's economy could lose R80bn, he said.
"If the proposed increase is introduced we can say that in the
worst case scenario, 200 000 jobs would be lost."
Another consequence for a company such as a gold mine would be a
R300m per annum increase in electricity prices.
"The impact is the same for other leading industries."
He explained that a 35 percent hike could lead to consumer price
inflation rising 1.2 percent.
"And the pass-through effects would hit food prices."
Vilakazi said Busa did not believe tariff hikes were the only
means whereby Eskom could continue supplying electricity.
"Money for Eskom is available out there if the right conditions
prevail."
Vilakazi suggested the regulatory environment for electricity
needed to be discussed and that independent power producers be
given an enabling environment in which to operate.
"A clear policy is also needed on renewable energy and we need
an augmentation of funding for the national solar water heating
system."
Vilakazi said Busa wanted a national consensus between the
government, organised industry and labour and Eskom on the
utility's future capital expenditure funding policy.
However, the shareholder needed to participate further in
funding.
"The shareholder [government] must provide further equity
injections to support its investment in Eskom. The basic principle
in any business is that the shareholder puts his money in and if he
is unable to do that, he seeks partners."
Vilakazi said Busa further advocated that Eskom reduce its
expenditure growth by one percent per annum.
"If this was done it could generate a saving of R5.6bn up
to the end of March 2015."
Eskom's funding model should strike a balance between tariffs,
debt and the injection of government funds.
Earlier, Eskom's acting chief executive Mpho Makwana told the
public hearing it was in the national interest for Nersa to "choose
appropriately" when deciding on the tariff hike.
"I have addressed hearings in eight provinces now and I still
say the right decision for Nersa's panel is simple, 35 percent, 35
percent, 35 percent."
- Sapa