Eskom hike could delay economic recovery

2010-01-21 12:50

ESKOM’s proposed tariff hike could delay the country’s economic

recovery, Business Unity SA (Busa) CEO Jerry Vilakazi has said.

“If the 35% increase is accepted by Nersa, we can wave goodbye to

an immediate recovery for South Africa’s economy,” he told a public hearing in

Midrand, organised by the National Energy Regulator of SA.

While Eskom’s proposed tariff hike would bring in R18.2?billion for

the first year for the parastatal, the cost to the country’s economy would far

exceed this amount. In the same time frame, South Africa’s economy could lose

R80?billion, he said.

“In the worst case scenario, 200?000 jobs would be lost.”

Another consequence for a company such as a gold mine would be a

R300?million per annum increase in electricity prices.

He explained that a 35% hike could also lead to consumer price

inflation rising 1.2%.

“And the pass-through effects would hit food prices.”

Vilakazi said Busa did not believe tariff hikes were the only means

whereby Eskom could continue supplying electricity.

“A clear policy is also needed on renewable energy and we need an

augmentation of funding for the national solar water heating system.”

Vilakazi said Busa wanted a national consensus on the utility’s

future capital expenditure funding policy.

However, the shareholder needed to participate further in

funding.

“The shareholder (the government) must provide further equity

injections to support its investment in Eskom. The basic principle in any

business is that the shareholder puts his money in and if he is unable to do

that, he seeks partners.”

Vilakazi said Busa further advocated that Eskom reduce its

expenditure growth by 1% per annum.

“If this was done it could generate a saving of R5.6?billion up to

the end of March 2015.”

Eskom’s funding model should strike a balance between tariffs, debt

and the injection of government funds.

Earlier, Eskom’s acting chief executive Mpho Makwana told the

public hearing it was in the national interest for Nersa to “choose

appropriately” when deciding on the tariff hike. “I still say the right decision

for Nersa’s panel is simple, 35%, 35%, 35%.”


Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News
Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.