Nersa grants Eskom 24,8% price rise

The National Energy Regulator of South Africa on Wednesday granted state-owned utility Eskom a 24,8% tariff increase for the 2010/11 financial year, falling short of the power firm’s request for a 35% hike.

For the following two financial years, Eskom was granted increases of 25,8% and 25,9% respectively.

Eskom applied for the tariff increase to help foot a R385-billion bill to build new power plants in the world’s top platinum producer and a major producer of gold.

Eskom, which provides 95% of the country’s power, has been battling an electricity shortage since January 2008, due to a lack of investment in new capacity and an ageing fleet of power stations.

The Congress of South African Trade Unions (Cosatu), meanwhile, threatened to call a national strike to oppose the tariff increases granted to Eskom.

Cosatu, which has nearly two million paid-up members, said in a statement it would explore all avenues to ensure electricity prices are not increased, and would resort to a strike if all else fails.

“If no progress is made in these discussions, the federation will not shrink from mobilising its members, and the wider South African public, in strike action and protests in the streets against such a savage attack on our living standards and economic future,” Cosatu spokesperson Patrick Craven said.

Trade union Solidarity said that Eskom’s approved tariff increases will lead to the loss of thousands of jobs.

“Eskom and [Nersa] are now to blame for the loss of thousands of jobs,” said spokesperson Jaco Kleynhans.

Prior to this application, Eskomhad demanded a 45% hike over the next three years, but reviewed the application after strong protests from major mining companies.

Last year, Eskom increased its tariffs by 31%.

In January, Nersa held countrywide public hearings on the tariff application.

Bitter pill
Mpho Makwana, acting CEO of Eskom, told the hearing in Polokwane that South Africans should absorb the shock of the increase now.

“We know this is a bitter pill we are asking the nation to swallow, but we will all ultimately benefit,” he told the hearing.

Business Unity South Africa CEO Jerry Vilakazi told Nersa’s hearing in Gauteng that if the increase was accepted by Nersa: “We can wave goodbye to an immediate recovery for South Africa’s economy”.

The Congress of South African Trade Unions, the South African Communist Party, the South African National Civic Organisation, the Young Communist League and the Treatment Action Campaign had all alleged that Nersa had already taken a decision to grant Eskom the 35% increase and the public hearings were only held to comply with the law.

Meanwhile, the South African Chamber of Commerce and Industry (Sacci) has estimated that a 35% hike could push inflation up by about 0,3%.

Sacci added that the hike would also cost South Africa about 500 000 jobs.—Reuters, Sapa

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