ANC: SA can't afford power hike

Johannesburg - South Africa's economy cannot afford a sharp electricity price increase, ANC secretary general Gwede Mantashe said on Friday, adding the state power utility should not be allowed to use pricing to make up past losses.

As part of efforts to tackle power shortages and fund an infrastructure expansion programme, Eskom has requested a 53% increase in electricity tariffs for 2008/2009 - which is likely to accelerate inflation. It had received approval for a 14.2% increase for the year.

The African National Congress and its leftist allies have opposed the request. Critics argue the poor and workers will be unable to afford electricity.

"We are convinced that the economy cannot afford that sharp increase in electricity prices," Mantashe said at a summit to discuss Eskom's price hike request.

He said it would be wrong for Eskom to use price rises to recover from past losses. "We should not allow that to happen."

Eskom has rationed power since January in response to a supply crisis that has scared investors and clouded the economic outlook.

Critics say the outages result from years of underinvestment in power generation for the booming post-apartheid economy despite warnings from Eskom.

Mines, one of the cornerstones of South Africa's economy, have had their electricity supply reduced, and millions of homes and businesses are regularly plunged into darkness.

"We acknowledge that some increases in tariffs will be unavoidable, but we can't simply write a blank check for Eskom," said Vavi Zwelinzima, general secretary of South Africa's largest labour federation Cosatu a powerful ANC ally.

He told the summit that it would be unacceptable to labour if poor and working class South Africans were asked to bear the burden of solving the power crisis.

- Reuters