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Gigaba says Eskom hikes are 'not fair but necessary'

Sapa

The 16% electricity tariff hike every year for the next five years is unavoidable, Public Enterprises Minister Malusi Gigaba said.

ublic Enterprises Minister Malusi Gigaba. (M&G)

"It [the tariff increase] is not fair, [but] it is necessary," Gigaba said at a business breakfast in Fourways on Tuesday.

"Given the challenges that we have ... we need to ask South Africans to bear the collective pain to fund this build programme and go through this painful process."

In October, Eskom submitted an application to the National Energy Regulator of South Africa for a 16% tariff hike every year for the next five years.

Gigaba said the poor needed to continue to be shielded. They would be charged a single-digit flat rate determined by municipalities.

Eskom asked municipalities to be considerate of their mark-up when charging more for electricity, as it was a source of revenue, Gigaba added.

High price
There is a high price to pay for social inequalities, Gigaba said.

"We must make the necessary strides towards inclusive growth and development.

"The political and economic systems must be fair, reputable and promote social justice and inclusion. We all realise that there is a high price to be paid for inequality and it is a social course that we will bear heavily if nothing is done."

Gigaba said greed should not play a role in development. The government established a presidential infrastructure coordinating commission to correct government and market failures, by coordinating allocation of resources in growth-enhancing sectors of the economy.

The country would not realise meaningful social and economic justice if capital was not allocated.

Gigaba said national economic recovery would only be achieved if all social partners worked together. "Government has mobilised all relevant stakeholders ... to respond to the immediate challenges associated with the global economic crisis and to build South Africa's future economy," Gigaba said.

'CEOs resign all the time'
The resignation of the CEO and two senior managers at South African Airways is not a reflection of what is happening in the parastatal, Gigaba said.

"It is regrettable that it happened, but CEOs resign all the time."

Chief executive Siza Mzimela, corporate affairs general manager Theuns Potgieter, and general manager for legal, risk and compliance Sandra Coetzee, resigned from the airline in October.

This came barely two weeks after most of the board, including chairperson Cheryl Carolus, also quit, saying there was a lack of support from its shareholder, the public enterprises department.

Gigaba described the resignations as a soccer team leaving the game before the final whistle. He said SAA officials had asked him to negotiate a financial guarantee with treasury, which was a lengthy process. Gigaba explained that his department and Treasury had needed to ask questions, evaluate the financial statements and study the facts presented.

"There were growing concerns raised about the airline ... We were not going to simply jump without studying the issue vigorously," Gigaba said.

He said the relationship between the government and the SAA should not only be a financial one.

South Africans were concerned about the airline's sustainability, Gigaba said.

Speaking about the collapse of low cost airline 1Time, Gigaba said his main concern was with the employees who had lost their jobs. "I wish this had not been the case ... I don't think that the reason 1Time has gone under is because of unfair competition," he said.

"I think that it is because of investment decisions that the company itself undertook ... The more the competition, the better for the customers of all of these airlines."

He said the government did not have the capacity to help all companies in financial difficulties.

Earlier this month, 1Time announced it had applied for business liquidation, and that all of its flights had been grounded.

Comair chief executive Erik Venter has blamed state-subsidised Mango for 1Time's demise. – Sapa

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