Johannesburg - By 2012 South Africa could have the world's highest electricity tariffs.
Only a couple of years ago the country was attracting foreign investment with assurances that its electricity was the cheapest.
Electricity could become hugely expensive if Eskom's application to increase the tariff by 45% a year over the next three years is approved. Should the plan get the go-ahead, in 2010 South Africans will be paying more for electricity than consumers in countries like the USA (83c/kWh) and South Korea (49.5c/kWh) are paying.
Locally, residential consumers will bear the brunt.
"These consumers, who are currently paying about 66c per kWh, could be paying 95c per kWh by 2010," said economist Mike Schüssler.
These tariffs are based on Eskom's residential homelight rate, which is expected to rise to R2.01/kWh by 2012.
Schüssler said the situation is aggravated by the fact that South Africa's electricity will become among the most expensive in the world, despite South Africans paying less tax on it than do people in other countries with expensive electricity.
In Italy (R1.20/kWh) tax makes up 25% of the cost. South Africa's tax on electricity is only 17%. This includes 14% VAT.
What is more, 94% of Eskom's power is generated from coal, which is the cheapest source of power generation anywhere in the world.
Countries like Germany, where electricity costs about R1.01/kWh, make use of very pricey wind energy.
No competitive advantage
Schüssler said South Africa should be paying far less for electricity than other countries, simply because it has so much coal.
Solidarity deputy general secretary Dirk Hermann agreed.
"Cheap coal is our competitive advantage. Eskom should pay very little for coal, but this is not so.
"If Eskom had bought its coal more cheaply, this would have meant that the utility would have had more money to spend on its expansion programme," Hermann reckoned.
"This means that electricity tariffs would not need to rise so steeply to help Eskom fund its massive expansion programme."
In June Solidarity asked the National Energy Regulator (Nersa) to investigate the South African coal industry.
The regulator replied it would look into the matter and investigate the possibility of collusion and price manipulation in the industry. Tembani Bukula, Nersa's member for electricity, at the time said Solidarity's imputations were relevant.
But on Friday Nersa said that it had not investigated the industry "because nothing sinister was evident".
Brian Sechotlho, Nersa's head of electricity tariffs, said Nersa had indeed "launched a study of the industry in order to better understand it".
"But since June our study has raised no flags or sounded any alarms. There is therefore no reason to conduct an investigation into the industry," Sechotlho said.
He said Eskom's coal was expensive because of problems in conveying it to its power stations. "Transport costs are increasing significantly - and not necessarily the cost of coal itself."
- Sake24.com
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