Eskom request is met with scorn

ECONOMISTS, unions and the Zululand Chamber of Commerce and Industry (ZCCI) are all dead set against Eskom’s proposal to raise electricity tariffs by another 12.6% next month – soon after it secured a 12.7% increase in April.

Business leaders warn the overall 25.3% hike would make Richards Bay’s manufacturing and mining industries ‘grossly uncompetitive’, ultimately resulting in companies closing their doors and pushing up the already exceptionally high 40% youth unemployment rate in the region.

‘Such an increase will end in marginal firms shutting down and multinational corporations will shift their production processes to other lower cost destinations,’ said Deputy Dean in the Faculty of Commerce Administration and Law at the University of Zululand (Unizul), Dr Irrshad Kaseeram.

‘The unwinding of BHP Billiton business interests in Richards Bay as a direct result of our loss in low cost electricity competitiveness, is a case in point. ‘It will have a detrimental effect on employment.’

ZCCI Manager Christa van der Walt said that this, added to the pressure of a looming fuel price rise (also expected next month), could push many businesses over the edge.

‘The South African economy relies on businesses of all sizes to stimulate an ever declining economic growth rate, but increasing overheads will only serve to limit positive growth and further increase the rate of unemployment.

‘Government should rather look at alternative energy generation.’

Trade union Solidarity Metal Industry Head, Marius Croucamp noted the metal and engineering industry has been in deep water for years owing to rising input costs and unstable commodity prices.

‘The industry has already been impacted in the form of retrenchments, short time and losses.

‘The proposed tariff increases will be a major setback for the metal and engineering industry in particular.’

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