Huge hikes to hit poor hardest

2015-03-23 00:00

WHETHER you are a business or a consumer, prepare for a double blow to your pockets as ­Eskom seeks a 22,27% electricity tariff hike and fuel goes up by around R2 per litre next month.

A R2 increase would mean R92 more per tank on a car with a 46-litre fuel tank.

With the fuel increase set to be announced later this week, small businesses and consumers are reeling at the thought of having to also fork out 22,27% more on their electricity each month.

Howick resident Graydon Sinkins said that based on his current electricity bill, with the ­proposed increase he would have to pay R450 extra every month.

“It will have a big impact on the budget. To pay around a fifth more of your normal bill is a substantial increase. It is not acceptable, especially as we are not getting the service and are having to put up with load shedding on weekends.”

Pietermaritzburg Agency for Community ­Social Action (Pacsa) director Julie Smith said the power tariff increase would not only affect ­businesses, but residents in the lower earning bracket would suffer the most, especially those with prepaid electricity as they already pay more per kilowatt than those on credit meters.

She said prepaid households averaged 350 Kilowatts a month, at a cost of around R465.

“The 22,27% increase will move it to R571 a month,” said Smith.

“The city has reached its threshold where residents cannot be squeezed for any more money.”

Along with the crippling effect on municipalities, Pietermaritzburg’s business community has warned of possible company closures and almost certain retrenchments if the hike gets the green light.

Pietermaritzburg Chamber of Business director Melanie Veness said she was “appalled” by the proposed increase and did not appreciate the lack of consultation.

“Past inefficiencies and inadequate planning cannot simply be passed on to the private sector in such an imposing manner.

“It is a short-sighted approach that does not appear to consider the catastrophic impact this may have on the economy.

“Electricity is a significant cost for many businesses, who would be unable to pass this level of increase on to their customers.

“The inevitable loss of jobs is something that we hope the decision-makers will take into consideration when this preposterous application is considered,” she said.

Pietermaritzburg CV Joints Specialist owner Rex Boreham said that should the increase be implemented, he would have to consider whether it was worth staying in business.

“I would really have to weigh up the pros and cons. It is getting way out of hand now,” he said.

Boreham said the increase would make it harder for all businesses to operate normally. He said the government did not consider that when expenses went up, many people would get retrenched as it was a “a vicious cycle”.

Pensioners, whose incomes remain static, are also facing a dire situation.

Emma Barter Old Age Home manager Henry Spencer said the increase would put a lot of pressure not only on them, but also other old age homes and retirement villages.

“Pietermaritzburg and the surrounding areas have approximately 26 such homes, of which some, especially those serving the poorer segment of our community, will be extremely hard hit by this unreasonable hike.

“At the age of 70 years, people need up to three times as much light as do 20-year-olds, and lighting is also of paramount importance when nursing older residents,” he said.

“In such circumstances, bed [numbers] will be reduced, homes will close, as no subsidised homes can afford such draconian increases,” said Spencer.

With Eskom unable to incur extra debt and the R20 billion bailout from government barely enough to keep the utility going, consumers will have to bear the brunt of funding the shortfall.

This came to light in a notice Eskom sent to the South African Local Government Association (Salga) last week.

Eskom is asking Salga and the National Treasury to comment urgently on their request that an additional 9,58% be added to the already planned 12,69% increase set for July 1.

The power utility made the urgent request because it missed the March 15 deadline to lodge an application with the National Energy Regulator of SA (Nersa) for the tariff increase.

In its motivation, Eskom said its initial plan was based on “assumptions” that the new power plants — Kusile, Medupi and Ingula — would start production. However, it was caught off-guard by the cost of using gas turbine-power stations in the Western Cape.

Eskom needs R9,5 billion to curb load ­shedding in the 2015-16 financial year — and this must be recouped from consumers.

The suggested dates for implementation of the increase could be as early as July 1, or at the latest September 1.

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