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Numsa rejects Eskom tariff hike, vows to take on IPPs, unbundling

Mar 10 2019 13:59
Carin Smith

The National Union of Metalworkers of South Africa (Numsa) said in a statement issued on Sunday that it rejects the tariff increase the National Energy Regulator of SA (Nersa) granted Eskom.

Nersa has approved electricity hikes of 9.41%, 8.1% and 5.2% for the next three financial years, far below Eskom's application for double-digit tariff increases.

Including the 4.4% increase previously approved, the hike will total 13.81% for 2019/20.

Nersa made the announcement on Thursday in Pretoria following Eskom's application for price hikes of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22.

According to Numsa, any increase in electricity tariffs, no matter how small, would be "disastrous for the working class and the poor who are already unable to afford electricity at its current rate".

In the view of the union, the tariff increases will also deepen the crisis for industries, particularly small to medium businesses, likely leading to retrenchments.

Numsa blames agreement signed with Independent Power Producers (IPPs) for Eskom's tariff hike.

Numsa is also concerned that the introduction of IPPs would lead to the shutdown of some coal-fired power stations in Mpumalanga, resulting in huge job losses.

Socially owned renewables

The union indicated that it is not opposed to renewable energy, but it wants "the working class" to define SA's renewable energy programme.

"It must be socially owned, because if it is profit driven, then the excesses which led to the climate change crisis will continue," states Numsa.
 
"We will intensify our mobilisation in communities and all members of the working class to reject this tariff increase, the IPPs and governments plans to privatise Eskom through unbundling."

President Cyril Ramaphosa said in answer to questions in Parliament on Thursday that, contrary to what some have claimed, restructuring Eskom will not result in the privatisation of the state-owned power utility.

He said the main benefit of the unbundling of Eskom will be to improve the state-owned power utility's financial management and ability to raise funding, as well as transparency and being able to mitigate and distribute risks and strengthen incentives for efficiency.

As for IPPs, Ramaphosa said they are investing their own debt and equity to construct these projects, including the cost of connecting these power projects to the grid.
 
The value of the 27 independent power producers' agreements signed in April 2018, represented in terms of private sector investment, is R57bn.
 
To date, the total value of private investment in South Africa's renewable energy generation capacity is R202bn.
 
It is expected that a total of 372 MW will be connected to the grid between now and March 2020 and that Eskom will buy R170m of electricity in the 2019/2020 financial year.

According to Ramaphosa, IPPs will likely eventually deliver electricity below the cost of running many of Eskom's power stations.

"SA will continue to generate energy from a mix of sources: coal, nuclear (which we already have), hydro, wind, solar and gas. Those are the sources of our energy mix and we are committed to having a healthy energy mix in terms of generation," said Ramaphosa.

In January, Minister of Water and Environmental Affairs Nomvula Mokonyane said there are only a few years left for South Africa to implement practical solutions for a green economy. She spoke at the 3rd Partnership for Action on Green Economy (PAGE) Ministerial Conference in Cape Town.

eskom  |  numsa  |  cyril ramaphosa  |  energy  |  labour  |  sa economy
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