The approval by the National Energy Regulator of South Africa (Nersa) of electricity price hikes of 9.41%, 8.1% and 5.2% for the next three financial years was roundly condemned by both business and political players yesterday.
Nersa’s rate approval fell short of Eskom’s application for a hike of 15% per year for the next three years. Instead, they were granted an increase of 9.4% for 2019, with 8.1% and 5.2% increases for 2020 and 2021.
The power utility put forward two applications, in an attempt to increase their annual revenue by R784 billion.
Nersa held public hearings thoughout South Africa to gauge the public’s feeling ahead of the proposed increases. In all, 119 000 comments were received, according to the regulator’s chairperson, Jacob Modise.
Several civil society groups, including the Organisation Undoing Tax Abuse (Outa), pushed back against the application, saying it would be devastating to the economy and consumers in general.
The hearings happened as it was reported that Eskom was expected to post of loss of more than R15 billion in the year to March 31.
Trade Union Uasa was the first to condemn the rate hike approval yesterday, saying though the increases were far below what Eskom asked for, “it is still devastating news for workers and the economy”.
“As a trade union, Uasa is most concerned about possible job losses, particularly in the energy-intensive mining industry.
“The Minerals Council of SA has already issued a warning that the mining sector could lose 150,000 jobs if Eskom’s application was granted,” the union’s spokesperson Stanford Mazhindu said in a statement.
“Uasa is opposed to the constant bailing out of Eskom and other state-owned entities [SOEs], with the hard-earned tax money of South Africans who work day after day to make ends meet. The taxpayer should not have to pay for poor management and corrupt deals.
“For a government that has been in place for so long to keep repeating that they are reviewing possible ways to assist our struggling SOEs is a slap in the face of thinking South Africans who expected to see the necessary plans in place long before businesses like Eskom were run into the ground.”
The union asked for a “workable solution to the Eskom crisis without placing an additional burden on the workers of this country”.
Johannesburg’s DA mayor Herman Mashaba echoed these sentiments, saying the increases were unacceptable, “given the poor state of the national economy and the massive corruption at Eskom itself”.
In a statement, Mashaba said: “While the city is appreciative of Nersa’s willingness to hear the voice of our residents, businesses and all South Africans at large, it is still our view that the present increase serves only to reward maladministration and corruption which has gutted Eskom.”
Mashaba said he hopes Nersa will “do all within its powers” to hold those responsible for the financial morass at Eskom accountable, and ensure the money looted from the entity is returned.
The Steel and Engineering Industries Federation (Seifsa) economist Marique Kruger said Nersa had missed an opportunity.
“Considering that investment decisions are often driven by the opportunity cost and the return on investment, Nersa has missed a unique opportunity to support businesses towards improving profits,” she said. “A much lower tariff increase would have rendered businesses in the metals and engineering cluster much more attractive for both domestic and foreign direct investment, thus impacting positively on employment.”
Kruger also pointed towards the impending carbon tax, high petrol prices and additional logistics costs, which, combined with Nersa’s decision “did not bode well for business”, especially the industrial production and the broader metal and engineering industries.