Jaspreet Kindra
The Congress of South African Trade Unions (Cosatu) has accused the government of reneging on an election pledge to cross-subsidise the electricity tariffs of the poor.
Cosatu was reacting to the National Electricity Regulator’s approval of a 6,2% annual price hike for Eskom the first above-inflation increase in more than 10 years. The price hike, coupled with the phasing out of cross-subsidies between different tariff structures, will be a “double shock” for poor people when they queue to pay their electricity bills next year, the federation says.
Arguing for the increase, Eskom said power charges had fallen 25% in real terms over the past decade, giving South Africans the cheapest electricity in the world. However, Cosatu charges that the African National Congress has reneged on a pledge in its local government election manifesto to cross-subside the poor.
The federation says it received assurances from the Cabinet that the subsidy system would not be reviewed before 2003, and only after pilot programmes to study the social impact. Despite this, Eskom announced in September that cross-subsidies would be phased out. Under the existing system urban consumers subsidise rural areas and the higher tariffs levied on industry help cut power costs to residential users.
Attempts to elicit comment from the Department of Minerals and Energy failed this week. The regulator could also not be contacted.
Cosatu’s social development coordinator, Josephilda Nhlapo-Hlope, says the unions do not know exactly how the two decisions will affect poor households. However, Cosatu general secretary Zwelinzima Vavi has been quoted as saying they could translate into tariff hikes of between 22% and 50%.
The regulator has reportedly explained that it approved the increase to enable Eskom to recover costs and earn a fair share on its assets.
Eskom also argued that tariff rises were needed to fund the construction of new power stations. The regulator rejected this, pointing out that in terms of the government plans to revamp the industry, the building of additional power stations is considered the private sector’s job.
Meanwhile, South African National Civic Organisation general secretary Dan Mofokeng has said the regu-lator “has no mandate” to endorse price hikes and has called for its restructuring.