Eskom hike 'still scandalous'

Johannesburg - Eskom's revised tariff proposal received a mixed reception on Tuesday.

Opposition parties rejected the proposed 35 percent tariff increase every year for the next three years, down from the previous proposed increase of 45 percent, saying it did little to "dampen concerns" about the effects of inflation.

"The fact that Eskom's tariff increase application appears to have been revised to 35 percent does little to dampen concerns about possible inflationary effects of such a tariff hike," Democratic Alliance MP Manie van Dyk said.

"A 35 percent increase will probably still push inflation outside of upper target range of six percent and will have a profound effect across the board for South African consumers and businesses alike."

Van Dyk said there was no question that Eskom needed funding to the tune of about R400bn to expand its operational capacity, but a debate was needed on whether endless tariff hikes were the only solution.

Freedom Front Plus MP Anton Alberts said it was scandalous that Eskom "still expects the consumers and taxpayers to pay for their mistakes".

"The planned increase will bring South Africa's economy to its knees," he said.

"Electricity is the backbone of any modern economy and without it we will quickly move backward to the pre-industrial days of history."

Alberts said the government should rather seriously consider fully opening up the power generation market and the speedy issuing of private power generation licences to competent businesses.

The United Association of SA union said the proposed increase was still too high and that "hard-hit consumers" will once again have to bear the brunt.

"Even at 35 percent the effect on inflation will be enormous and will have a serious impact on economic growth going forward," the union said in a statement.

Business Unity SA (Busa) welcomed the proposed decrease, but said it was clear from recent SA Reserve Bank statements that electricity costs were playing a major role in preventing inflation from falling faster.

"Busa agrees that [a] new business model is needed for Eskom to promote competition and encourage alternative suppliers of electricity in a restructured electricity market," the organisation said.

The department of public enterprises welcomed the revised application, saying Eskom had to ensure that the impact of the increase on the poor, and small and medium enterprises would be mitigated.

"We are confident that the National Energy Regulator in making its final decision, will take all the proposals into consideration, including the country's future electricity supply requirements, and the need to ensure that Eskom is financially sustainable and operationally efficient," the department said.

- Sapa