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Gigaba calls Eskom tariff hike application 'unjustified'

Oct 31 2017 14:57
Mxolisi Mngadi

Durban – Finance Minister Malusi Gigaba said on Tuesday that power utility Eskom’s application for a 19.9% electricity tariff hike next year is "unjustified".

Gigaba was addressing a business breakfast in Umhlanga, north of Durban, organised by the Durban Chamber of Commerce and Industry.

"To ask South Africans to pay more ... when the economy is subdued and the mid-term outlook is as subdued as it is and we have the types of financial and leadership challenges that Eskom is now experiencing, I think that will serve as a perverse incentive," he said. "We’ve got to be careful what we do."

Eskom has asked National Energy Regulator (Nersa) to allow it to implement a 19.9% tariff hike for the 2018/19 year. Nersa is currently conducting public hearings into the feasibility of the increase. 

GIgaba also called on the power utility to stabilise its finances, saying that public officials needed to be "circumspect" about how they manage public resources.

"All public officials needed to be conscious of the need to fight corruption, irregularities and inefficiencies to ensure that state-owned companies perform well," said Gigaba. 

"That’s why I think that the Eskom application for a higher tariff is unjustified, given the fact that on the other hand we have excess electricity."

The finance minister told the business breakfast that Eskom must "incentivise" South Africans by improving its governance and employing what he termed "properly qualified executive leaders from CFOs (chief financial officers) to CEOs (chief executive officers) and all other executive directors".

Mini budget

Gigaba criticised those who said his mid-term budget painted a bleak picture of SA's economy and failed to boost confidence. 

He delivered his maiden mini budget to Parliament in Cape Town last Wednesday. 

The minister told the business breakfast that he had to present facts about the state of SA's economy as they stand. "We gave an honest view of the challenges facing our country. We couldn’t go and spin ourselves to the country knowing all is not well. We couldn’t just go to Parliament and stand before the nation and lie.

"All the things that we said in terms of the country’s economic outlook for the medium-term budget were facts, as they stood before us, when we presented the statement," he said. 

"No minister of finance, worth their soul, would have presented anything different; they would have stated the facts as they are."

Pay your taxes

Gigaba said everyone needs to pay their taxes, given that SA faces a R50.8bn tax revenue shortfall.

And with National Treasury expecting GDP growth of only 0.7% this year, Gigaba said that "little social and economic transformation" could be expected without stronger economic growth.   

He urged the private sector to join hands with government to boost the economy. 

"Economic growth and transformation must become neutrally reinforcing principles. Government is doing its share and will continue doing so," he said, mirroring what he said in his budget address. 

"The private sector must bring something to the table, it must be a give and give situation," he said. 

Speaking of the state's mounting debt, the finance minister said government doesn’t want to leave future SA generations facing a debt hole they won't be able to manage. 

"We need to give them a growing economy with less debt so that they could begin developing wealth for themselves and grow [the] economy of those who will come after them," he said.

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nersa  |  eskom  |  malusi gigaba  |  sa economy  |  electricity

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