Municipalities are at risk whether Eskom’s interim price increase of 34% was granted or not, the South African Local Government Association (Salga) said on Tuesday.
Mthobeli Kolisa, executive director of infrastructure services at Salga, described the parastatal’s approach to an application for a tariff increase as ‘chaotic and incoherentâ€.
He was speaking at public hearings into Eskom’s application held by the National Energy Regulator of SA (Nersa) in Pretoria.
Kolisa took issue with the fact that the application was submitted late, leaving no room for consultation, and that it failed to provide a detailed breakdown of the need for the steep hike.
‘While we recognise that Eskom has struggled to reach finality with national government [on a funding model] — we still do not understand why Eskom was not able to submit its interim application to Nersa. Rather they delayed the application to point where legislated time frames were ignored and there was no room for consultation,†he said.
He cautioned that municipalities would not manage further price hikes this year.
The parastatal has indicated its current application was an interim one and it would apply for another increase once its funding model was finalised in the latter half of the year.
A further increase would be ‘unacceptableâ€, he said.
‘If then the ruling of Nersa leads to tariffs that are larger than those anticipated in our budgets, then what we are likely to see is that municipalities financial viability will be compromised,†Kolisa added.
National Treasury told municipalities to make provision for a 34% increase in their budgets.
‘Municipalities were advised to budget for initially they said 25%, and then 34%. They said 25% in real terms and 34% in non-real terms,†he said.
He requested that Nersa take into account these parameters set by the National Treasury when arriving at its decision.
Kolisa said if the application was rejected, increases later on would be larger, also risking the financial viability of municipalities.
He also requested that the regulator minimise steep price hikes in the future.
‘We would accept Nersa’s decision if it minimises the risk to municipalities of having their budget processes set aside by an aggrieved consumer on the basis that the process was unlawful,†he said.
On Monday, the Nelson Mandela Bay municipality also described the parastatal’s interim application as unlawful.
‘Eskom’s application undermines legislation. Nersa is a statutory body making an administrative decision.
‘Nersa does not have the power to overlook non-compliance [with legislation]. If it [legislation] is not complied with, the application must be rejected.
‘Any decision based on that extent of unlawfulness would be capable of being set aside,†said advocate Graham Richards for the municipality.
Granting the interim price hike would leave municipalities vulnerable to litigation due to the parastatal’s failure to adhere to time frames, coupled with the lack of information to justify the increase, prescribed by law, he said.
The Anti-Privatisation Forum, expected to stage a protest outside the hearings later on Tuesday, painted a dismal picture of the effect of the hike on the poor in its presentation.
The Nersa hearings would conclude on Tuesday. It had received 170 written submissions and 25 oral submissions would be heard during the two-day hearings. – Sapa