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Don't dump your problems on consumers, Eskom told

Mar 01 2016 18:27
Matthew le Cordeur

Cape Town – The message is clear. Eskom must stop dumping its problems on consumers, who are battling to stay afloat in a country with high unemployment, low growth and steep inflation.

Business, industry, labour and activist groups all criticised energy regulator Nersa’s 9.4% tariff hike to help fund Eskom’s R22.8bn shortfall on Tuesday.

While Eskom was unhappy they did not receive the full R22.8bn, which would have translated into a 16.6% increase, opponents were equally displeased that an increase was given at all.

READ: Nersa approves 9.4% electricity price hike

Anti-tax abuse organisation Outa and trade federation Cosatu said consumers were taking the fall for Eskom’s inefficiencies.

“This increase is too lenient towards Eskom and allows the bill for various inefficiencies within Eskom to be passed onto consumers,” Outa said.

Cosatu agreed, saying “consumers are being forced to carry the burden of Eskom’s inefficiencies”.

“Workers and their families have already been slapped with increases in personal income tax last year and the fuel levy this year, and the costs of other basic services like health are also rising.”

Both bodies called on government to bring change to the sector, although they had different views on how this should be achieved.

Outa says if the Department of Energy takes full responsibility for Eskom’s failures, it would force it to implement policy, legislative and accountability measures required to stop the utility’s “leaking bucket”.

However, Cosatu said the introduction of a super-rich tax is needed so government can fund Eskom and ensure battling consumers are spared the burden of higher electricity prices.

The government must “introduce radical reforms in our tax system to make resources available for infrastructure development ,” it said.

It also said the government must “force Eskom to cut fat, improve drastically its revenue collection capacity and manage contracts effectively to address its financial problems”.

“This crisis again points to the urgent need for government to massively invest in quick, affordable and safe renewable energy and to once and for all scrap the clearly unaffordable, dangerous and time consuming nuclear energy plans,” Cosatu added.

The additional electricity price hike will encourage users to cut ties with Eskom and use off-grid generation solutions, according to the The Cape Chamber of Commerce and Industry.

“More businesses and domestic consumers will turn to alternative energy sources to escape the high and seemingly ever-increasing tariffs,” said chamber president Janine Myburgh.

Alternatives included gas for cooking and heating, solar water heaters and roof-top PV panels to supply home-generated electricity.

“Now we have a situation where gas is getting cheaper, solar is getting more efficient and Eskom tariffs continue to escalate year on year. It doesn’t take a rocket scientist to see where this is going,” she said.

The increase will have a major impact on increasing the mining industry’s cost base, said Chamber of Mines CEO Roger Baxter.

“Further pressure on electricity prices will push a number of mining companies further into the red necessitating further restructuring,” said Baxter.

“While the mining industry supports Eskom’s intent to resolve South Africa’s long-term energy crisis, we fully support the statements made by Minister Pravin Gordhan in the Budget Review for 2016, indicating that ‘further efficiency improvements are necessary at Eskom to ensure moderation in future tariff increases’, including the possibility of co-funding through public-private partnerships.”

Outa said it will be embarking on an in-depth study of Eskom’s dealings that have resulted in enormous electricity price increases of over 700% (some estimate 1000%) in the last decade, starting with a request - through the Promotion of Access to Information Act (PAIA) - for information relating to coal contracts, diesel contracts, property valuations, delays on Medupi and Kusile power stations, power station performances and various other matters relating to procurement, it said.

The R11.241bn Eskom will receive does not help Eskom’s financial sustainability and “will have operational consequences”, Eskom CEO Brian Molefe said.

“We will do our best to minimise the risk of load shedding, striking a balance with Eskom’s already depleted balance sheet,” he said in a statement.

READ: Molefe: Hike of 'only' 9.4% will have consequences

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nersa  |  cosatu  |  outa  |  eskom

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