Opposition parties on Tuesday rejected Eskom’s proposed 35% tariff increase, saying it did little to ”dampen concerns” about the effects of inflation.
”The fact that Eskom’s tariff increase application appears to have been revised to 35% does little to dampen concerns about possible inflationary effects of such a tariff hike,” Democratic Alliance MP Manie van Dyk said.
”A 35% increase will probably still push inflation outside of upper target range of 6% and will have a profound effect across the board for South African consumers and businesses alike.”
He was reacting to an earlier announcement by Eskom that it had lowered its request for a 45% tariff increase to 35% over the next three years.
Van Dyk said the hike was the consequence of ”an array of failings by the ANC government and Eskom management”.
”It follows years of mismanagement of coal stocks, inadequate risk management, lack of proper maintenance and massive non-technical losses within Eskom and more broadly, the ANC’s blocking of attempts to build new power plants and tendency to interfere for political purposes at every possible opportunity.”
Van Dyk said there was no question that Eskom needed funding to the tune of about R400-billion to expand its operational capacity, but a debate was needed on whether endless tariff hikes were the only solution.
Freedom Front Plus member of Parliament Anton Alberts said it was scandalous that Eskom ”still expects the consumers and taxpayers to pay for their mistakes”.
”The planned increase will bring South Africa’s economy to its knees.
”Electricity is the backbone of any modern economy and without it we will quickly move backward to the pre-industrial days of history.”
Alberts said the government should rather seriously consider fully opening up the power generation market and the speedy issuing of private power generation licences to competent businesses.
”Systematically privatising Eskom which would lead to new influx of capital,” he said.
The United Association of SA union said the proposed increase was still too high and that ”hard-hit consumers” will once again have to bear the brunt.
”Even at 35% the effect on inflation will be enormous and will have a serious impact on economic growth,” the union said in a statement.
Business Unity SA (Busa) welcomed the proposed decrease, but said it was clear from recent South African Reserve Bank statements that electricity costs were playing a major role in preventing inflation from falling faster.
”Busa agrees that [a] new business model is needed for Eskom to promote competition and encourage alternative suppliers of electricity in a restructured electricity market.”
In its reaction trade union Solidarity said it would oppose any tariff increase Eskom asked for until such time as Eskom finalised an adequate financing model for expanding its capacity.
”The application for a 35% increase is also unacceptable to us and we will strongly oppose it,” spokesperson Jaco Kleynhans said.
Eskom should draw a distinction between financing its operational costs and financing capacity expansion.
”Only when Eskom has a plan for financing its capacity expansion will the company be able to calculate the tariffs required to pay for it.”
The Department of Public Enterprises welcomed the revised application, saying Eskom had to ensure that the impact of the increase on the poor, and small and medium enterprises would be mitigated.
”We are confident that the National Energy Regulator in makingits final decision, will take all the proposals into consideration, including the country’s future electricity supply requirements, and the need to ensure that Eskom is financially sustainable and operationally efficient,” the department said. — Sapa