Eskom tariff hikes slammed

Wednesday, February 24, 2010

Pretoria - The National Electricity Regulator of SA (Nersa) has been widely criticised for granting Eskom a multi-year tariff increase.

Nersa on Wednesday announced it was granting the power utility a 24.8 percent tariff increase for 2010, 25.8 percent for 2011, and 25.9 percent for 2012.

However trade unions and some political parties said the hikes would mean more job losses.

The SACP said the increase was a "catastrophic betrayal" of the poor who are bearing the brunt of a neo-liberal economic regime that did not encourage increased state investment.

"It is indeed very sad that the majority of our people are expected to pay for the blunders of the elite," SACP spokesman Malesela Maleka said.

COSATU said the hikes were four times more than the current rate of inflation which it said was "unacceptable".

The National Union of Metalworkers (NUM) said the tariffs are going to exacerbate job losses and negate government's efforts of creating decent work in the midst of the high cost of living and widening income inequalities amongst the rich and the poor.

The SA Chamber of Commerce and Industry (SACCI) also warned of vast job losses.

"Energy constitutes a major input cost for a large proportion of businesses. The increase will probably have an adverse impact on investment in production," SACCI said.

"SACCI estimates that approximately 250 000 jobs will be lost as a consequence, and it will be a factor in CPI (consumer price index) remaining outside the target range."

The Independent Municipal and Allied Trade Union (Imatu) said the hike would mean more debt for municipalities and ultra-poverty.

"Municipalities are battling with the collection of rates and taxes and this increase will mean even more debt for the embattled institutions," Imatu said.

The UDM added its disappointment saying the tariff hikes will hit the economy hard.

"Indeed these tariff increases will have a huge negative impact on the economy and are likely to lead to greater unemployment."

But the ANC welcomed the hikes, calling on municipalities to respect Nersa's guidelines on increases.

"Their decision to increase electricity by 24.8 percent beginning in April 2010, 25.8 percent in 2011 and 25.9 percent in the following year, is a vast improvement on the original proposal by Eskom for tariff increases of 35 percent over a three-year period," party spokesman Jackson Mthembu said.

Mthembu said the party believed this holistic approach was to ensure electricity supply and "we also believe that such a holistic and comprehensive approach should not put the burden of the energy industry recapitalisation solely on the poor consumers."