Cosatu outraged over Eskom's proposed 45% hike

The Congress of South African Trade Unions (Cosatu) said on Tuesday it is extremely angry at what it called Eskom’s “outrageous and insensitive” request for a whopping 45% a year electricity tariff hike over the next three years.

It would mean that by the end of those three years consumers would have been hit by a 200% hike in electricity tariff hikes, the trade union federation said.

Earlier, Eskom’s chief executive Jacob Maroga announced the utility had applied for a 45% electricity tariff hike for each of the next three years.

“Cosatu rejects it outright, especially given the continued absence of clear and effective measures to protect the poor,” it said in a statement.

It added that if this trend of steep electricity hikes continues many of the poor will not be able to afford electricity at all, and will turn to more dangerous sources of heat and light, such as paraffin and gas.

“Cosatu will campaign for the amount of free basic electricity for the poorest users to be increased by the same percentage the electricity tariff would have gone up by over the next three years.

“As well as the direct blow to residential consumers, this proposed increase flies in the face of government’s efforts to create decent work through small and medium businesses, many of which will be unable to survive such increases year after year,” Cosatu asserted.

It noted that big, intensive energy users will continue to pay much less per unit for the massive amounts of electricity they use.

“These heavy electricity users reap further benefits by hedging their electricity costs through secret long-term contracts they enter into with Eskom.”

Cosatu said it will vigorously oppose the proposed increase and “should the proposal be accepted regardless of the public opposition, Cosatu will take to the streets and organise strike action under Section 77 of to the Labour Relations Act”.

“A gross insult to vulnerable South Africans”
Meanwhile, the DA said Eskom’s latest tariff application was “a gross insult to vulnerable South Africans”.

“The South African public is now carrying the cost of the ANC government’s mismanagement,” said the DA’s shadow minister of energy Sejamothopo Motau in a statement.

“Eskom, a key utility, central to the lives of all South Africans, has been systematically reduced to an institution that operates on the red line, every day. That is not the public’s fault.”

South Africans had invested their faith in various African National Congress (ANC) administrations to look after their interests.

“That good faith has not been repaid,” Motau said, adding it had instead been abused.

“And, despite not a single person being fired, suspended or rebuked for Eskom’s mismanagement—if anything they have been rewarded with pay increases—we are all now being [made] to foot the bill for a collective failure we are not responsible for.”

Motau said this was not only an insult but a further abuse of the public’s good faith.

“Because the message it is sending, when all the rhetoric is removed, is that not only will this government never act against those that are guilty of maladministration and bad judgement, they will be rewarded and when that same government has to compensate for its own inadequacies, it will turn to the public to bail it out.”

Motau said it was “disgraceful” that Maroga had received a 26,7% salary increase.

He said the list of problems at the utility was now “seemingly endless”, and each of these problems illustrated the fact that gross mismanagement was the real cause of Eskom’s problems.

“There simply is not evidence to support Eskom’s claims that higher input costs are the chief cause of these tariff rises—indeed, the price of coal fell by 59,2% in August from a year ago.”

He said that according to a study by the International Energy Agency, the international average price of coal power was about 26 cents per kilowatt-hour.

Many South Africans, however, were already charged at more than double the international norm at 65 cents per kilowatt-hour, and this was before the tariff increase.

“Debacles such as the mismanagement of coal supplies, the failure to apply the most basic considerations when procuring large capital, terrible mismanagement ahead of the load shedding period, and the failure to plan for the Medupi power station water requirements [which will result in a major environmental disaster if nothing is done] demonstrate exactly what is wrong at the utility.”

Motau said the DA would “interrogate” Eskom’s application, and submit further parliamentary questions where necessary.

“In the meantime, it is grossly unfair to force South Africans to pay up for the failures of Eskom,” he said.

Agricultural union TAU described Eskom’s application for a rise in electricity tariffs as “unacceptable”.

“It is far higher than the inflation,” it said in a statement.

Farmers, who were price takers, could not recover these costs, TAU said.

“The input costs of farmers are already very high, and in several cases, farmers hover on the brink of financial survival.”

This could lead to farmers leaving the industry and could have serious consequences for food security.

It proposed an electricity rebate for farmers, similar to the existing diesel rebate.

“Government should pay attention to this if they are serious about food security, TAU SA president, Ben Marais said.

“Furthermore, TAU SA demands a proper audit of the levels of expertise within Eskom to determine whether Eskom will be able to manage the proposed increase of its capacity in an effective and sustainable manner,” he said.

He said that consumers had been abused for years.
 
“TAU SA is concerned about the effects these rise in tariffs will have on the macro economy, which is still trying to recover from the recession,” Marais said.—Sapa

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