Labour, business say Eskom hike will hit economy

Labour and business agreed on Tuesday that Eskom’s proposed 53% tariff increase would have a severe impact on the economy.

The National Energy Regulator of South Africa (Nersa), Business Unity South Africa (Busa), the Congress of South African Trade Unions and the National Economic Development and Labour Council all agreed that the hike would be detrimental.

Busa’s Roger Baxter said studies had shown that the economic impact of the hike would reduce the country’s gross domestic product and would lead to about 55 000 job losses.

”It will have the biggest negative [effect] on the economy,” Baxter said.

”Pricing is not the only solution; effective leadership and strategic appropriation of management is important,” he added.

Busa said that time was needed for businesses and consumers to get used to the increases.

”It is a process, not a one-off event. It will take [a] long [time] for people to adjust.”

Cosatu also rejected Eskom’s proposal, saying it would have far-reaching consequences.

”The proposed increase is not economically viable, it will have devastating effects not only on the poor but also on the economy,” said Cosatu’s deputy general secretary, Bheki Ntshalintshali.

Nedlac said prices should be increased over a period of five years to avoid a ”shocking” impact on the economy and that a ”quantum leap” in prices was to be avoided.

Meanwhile, the Anti Privatisation Forum’s Silumko Radebe said: ”It would negatively affect the living standards of people … especially the poor.”

The forum called for government’s allowance of 51 kilowatts of electricity to be increased to 100 kilowatts per month.

Nersa should not review Eskom’s proposed price increase until a full analysis of its economic impact was done, the Consumer Goods Council of South Africa said.

The council’s Nick Tselentis said the utility’s lack of transparency and aversion to other supply possibilities had created the impression that it had ulterior motives.

”Eskom’s lack of commitment must be put on the table,” he said.

He said energy efficiency measures had not been considered and that co-generation, wind power and hydro electricity had also been ”shunned”.

He said the question also needed to be asked whether Eskom could legally switch off consumers’ power.

”Did Eskom have the right to load shed?”

Miriam Altma of the Human Sciences Research Council (HSRC) said Eskom had ”far overstated” what it needed.

”18% is enough,” she said, adding that Eskom had not been clear about what it needed to achieve.

She said the price needed to be increased to cover the cost of investment and to reduce demand in industry and high income households. – Sapa

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