South Durban sees red over Eskom’s proposed 15% hike

WHILE electricity parastatal Eksom seeks to hike South Africa’s electricity tariffs by 15% for each of the next three years, civic organisations such as Organisation Against Tax Abuse (OUTA) and the South Durban Basin’s own South Durban Community Environmental Allaince (SDCEA) are strongly contesting the bid.
On Monday, 14 January, the National Energy Regulator (NERSA) started public hearings on Eskom’s fourth multi-year price determination (MYPD4) of electricity tariffs for the three years from April 2019 to March 2022.

In presenting OUTA’s main reasons for its opposition to the increases, it said Eskom’s latest request for an exorbitant increase comes on the back of more than 500% increase in tariffs over the past 11 years, which has had a detrimental effect on the cost of doing business and living in South Africa. This is largely due to poor leadership, political meddling and corruption which has permeated the largest state-owned entity and caused a rapid rise in operating costs (primary energy and employee expenses) and debt, which rose from R35bn in 2007 to more than R400bn today.
“OUTA cannot accept such high tariff hikes at this stage, despite the fact that Eskom is broke,” says Ronald Chauke, OUTA’s portfolio manager on energy. “At best, we propose NERSA should not allow Eskom to exceed CPI, which is around the 5% mark, but instead Eskom should find savings by reducing the headcount and staff costs, along with returning to lower primary energy costs by undoing the inflated and often corrupt contracts entered into during the Jacob Zuma era,” said Chauke.
“We are tired of inefficient SOEs believing they are able to pass on their massive operating and debt costs to society, when in fact they should be running their operations as innovative world-class entities,” says Wayne Duvenage, OUTA’s CEO.

READ: SDCEA to protest outside Eskom’s Durban offices
“We also cannot accept that the value of Eskom’s Regulatory Asset Base, on which part of these tariff hikes are based, is allowed to be increased by over 700% from last year’s value of about R750bn. In fact, we believe that Eskom’s real asset base values should be pegged at no more than R400-bn and its reporting of inflated values for its power plants is contrary to prudent financial reporting, which is a serious concern.”
Desmond D’Sa from SDCEA said the country is going through a crisis with climate change, which he says is caused locally more by Eskom than any other single institution on this continent and it is affecting everyone. “Climate change is worsening, with droughts that are today debilitating Free State and North West Province’s maize production and that keep Cape Town on water restrictions. Climate change is causing ever more extreme storms, which also keep Eskom’s coal supplies too wet to burn,” he added.

DID YOU KNOW?
Click on the words highlighted in red to read more on this and related topics. 
To receive news links via WhatsApp, send an invite to 061-876-3179
The Southlands Sun is also on Facebook, Twitter, Instagram and Pinterest – why not join us there?

Do you have more information pertaining to this story? 
Feel free to let us know by commenting on our Facebook page or you can contact our newsroom on 031-903-2341 and speak to a journalist.

(Comments posted on this issue may be used for publication in the Sun)