Eskom tariff increase hits hard on everyone
JOHANNESBURG – The increase will negatively impact small and big business including ordinary citizens.
Local government and business institutions have raised concern over the recent Eskom tariff increase which will hit hard on the cost of living.
The National Energy Regulator of South Africa recently granted Eskom an increase of 9.4 per cent which was below its original 17 per cent application for the financial year 2019/20. However, the South African Local Government Association (Salga), representing all South African municipalities, said that the increase was still high and above the cost of living which will negatively impact small and big business including ordinary citizens.
Salga’s Sivuyile Mbambato said South Africans must eventually pay for these increases through a pass-through tariff from municipalities. “The decision still poses risks to the country’s economy and to all municipalities. Municipalities are already facing fundamental changes and transition within the energy sector. Coupled with many being cash-strapped, losing customers, record high non-payment rates due to ever increasing electricity prices, unemployment and the non- growing economy, the increase places increasing pressure on municipalities financial sustainability,” said Mbambato.
Mbambato further said that revenue collection was completely dependent on customers’ response to prices, which has been negative for the past 10 years. As a result, the current increase would impact negatively on municipalities. “This is evident in the decline of municipal electricity sales, the rise in non-technical losses and increasing number of customers resorting to alternative energy options with the intention to be independent of municipal supply and grids.”
City of Johannesburg Mayor Herman Mashaba said the City, amongst many other stakeholders across the country, had made representations to Nersa stressing the concerns held by residents and businesses in respect of the previously proposed tariff increase.
Mashaba said about 45.2 per cent of the residents of the City are living below the poverty belt line. “Given the poor state of the national economy and the massive corruption at Eskom itself, the City, on the behalf of our residents, had argued that the proposed tariff increases were simply unacceptable. 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,” said Mashaba.
CEO of the Randburg, Fourways and Lanseria Chamber of Commerce and Industry, Linda Blackbeard, said the price increase will have an effect on entrepreneurs and businesses alike as budgets are tight and expenses are high.
“Cost to company is becoming higher and higher and the profit margins lower and lower. Businesses are battling to keep their doors open. Cost increases are always passed down to the end user making prices higher at the end of the line for all,” she said.
Blackbeard said it was not only the electricity hike that caused the business sector to feel the pinch but also the continual and ever-increasing power outages. “It affects business production from manufacturing to the construction industry and motor trade. It affects everyone that can’t afford generators. If you can, then it’s the cost of the fuel to run it. It’s also the astronomical fuel prices all adding the pressure on the entrepreneur and businesses in general.
“Everything affects the bottom line – all the way down the line.”
Blackbeard said as a chamber they were experiencing businesses that have been members for more than 20 years cutting back or closing down.
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