Cosatu and DA reject Eskom’s proposed electricity price hike

It is rare for a trade union federation and a liberal party to agree, but when it comes to the staggering electricity tariff increase proposed by Eskom, even enemies are nodding in unison.

Trade union federation Cosatu and the Democratic Alliance have made submissions to the National Energy Regulator of South Africa (Nersa), rejecting Eskom’s proposed tariff hike of 25.3% for the 2015-16 financial year.

Both Cosatu and the DA have agreed that South African electricity consumers simply cannot afford to pay an additional quarter of their bill.

Nersa is expected to make a final decision on the increase by the end of June. 

In a press conference held in Johannesburg on Monday, the DA said the proposed tariff hike would be terrible for the economy.

“We will therefore vehemently oppose any tariff increases in the coming financial year while our economy continues to suffer from constant load shedding as a result of the mismanagement of Eskom,” said DA shadow minister for energy Gordan Mackay.

The party said the energy crisis has resulted in job losses and has already cost the country billions of rands.

Both the DA and Cosatu said with the current economic stagnation in South Africa, the proposed hikes are unaffordable.

“We argue that 36% rate of unemployment, 1.3% GDP growth in the Q1 (first quarter) of 2015 and the fact that more than 50% of South Africans are living in poverty doesn’t warrant electricity hikes,” Cosatu said in its submissions to Nersa.

The DA’s Mackay argued that the hikes would kill job creation.

“The impact of tariff increases is particularly acute for small, medium and micro-sized enterprises (SMMEs) who have limited capacity to absorb higher costs,” he said.

Eskom’s woes
The DA also raised concerns about the running of Eskom. 

“Despite these increases it [Eskom] has still failed to stabilise its financial position and requires constant government bailouts to stay afloat,” Mackay added.

In February this year, President Jacob Zuma announced that government would give Eskom a R23-billion bailout in an attempt to stabilise its finances.

Aside from financial trouble, Eskom is battling to keep the lights on by not generating enough electricity to meet the demand.

The cherry on top of Eskom’s woes is its leadership problems.

“South Africans deserve proper leadership to get us through the crisis we are facing,” the DA bemoaned.

Cosatu further argued that citizens cannot bear the burden of bad leadership decisions.

“We argue that the problem Eskom is facing is due to its failure to maintain the plants and to commission the new power stations on time; the working class cannot therefore pay the price for Eskom’s inefficiencies,” Cosatu’s industrial policy co-ordinator Jonas Mosia said in a statement. 

Privatisation debate
However, where Cosatu and the DA disagree is on what should happen to Eskom.

The DA has called for its privatisation, saying there should be a sale of an equity stake in Eskom.

“Such a stake will raise billions of rands, strengthen Eskom’s financial position, introduce skilled board members to the parastatal and improve overall management of Eskom,” Mackay said.

Cosatu has rejected the privatisation of Eskom – its stance is that “government, as a shareholder, has a responsibility to fund Eskom”.

The debate around privatisation has been raging within the ANC-led tripartite alliance for some time.

 ANC secretary general Gwede Mantashe said the party has been debating whether government should consider the Chinese option of financing Eskom.

Following a national executive committee meeting last month, he said that in China, government had capitalised several of its state-owned enterprises by taking around 30% to 40% of a state-owned enterprise, listing it and retaining its 60%, as a way to capitalise the institution.

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