For Mboweni's growth plan to succeed the ANC has to give up certain dogmatic positions that were formulated when 7% growth was the status quo, writes Adriaan Basson.
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Dear Mr Jacob Modise, Chairperson of the National
Energy Regulator of South Africa (Nersa),
I write this letter to register the City of
Johannesburg's opposition to Eskom's proposed electricity tariff increase
currently being considered by Nersa.
As a City with an obligation to act in the
best interests of all its residents, we simply cannot accept the proposed increase
of 15% over the next three years, due to the profound impact it will have on
the livelihoods of our residents, and the businesses operating in our city.
The Reserve Bank's Monetary Policy
Committee's January 2019 statement indicates that inflation is expected to
average 4.8% in 2019, 5.3% in 2020 and 4.8% in 2021. A price increase of more
than 10% above inflation, on the back of a 500% increase over the past eleven
years, will increase the cost of living for the city's residents and place a
strain on much needed economic development in Johannesburg.
READ: An open letter of apology to all South Africans
Johannesburg accounts for 15.2% of South
Africa's GDP and 13.1% of the country's employment. The city has not been
immune to the sluggish economic growth in South Africa, with its economic
growth predicted to be only 3% by 2021. Multiple economic modelling studies
have shown that increased electricity prices lead to constricted aggregate
output in the economy; a state of affairs that Johannesburg and South Africa
plainly cannot afford in our current troublesome economic climate.
Businesses and industry identify the cost
of doing business, which includes the cost and supply of electricity, as one of
the main barriers to growth. Investors are hesitant to start new ventures in
South Africa, due to uncertainty regarding electricity supply and costs. By
further increasing electricity rates, meaningful economic growth will be
hindered and all South Africans will be worse off.
While we are cognisant of the issues and
challenges faced by Eskom, we reject outright that customers are responsible
for carrying the costs of management failures at Eskom. We strongly believe
that there are other mechanisms that Eskom can apply to improve their financial
The proposed increases cannot be deemed to
be reasonable, and should under no circumstances be approved by Nersa.
Residents of our city are facing an increased onslaught on their wallets and
financial wellbeing through increased fuel prices and the VAT increase. The
multi-party government of the City of Johannesburg is committed to being
pro-poor. As such, we cannot stand idly by while consumers are punished for
years of political meddling, mismanagement and corruption at Eskom.
If the proposed 15% increase is granted,
the City of Johannesburg's ability to fulfil its constitutional mandate will
also be adversely impacted. We are currently in the process of providing
affordable housing units in the inner city, through collaborative efforts with
the private sector. Increased electricity costs will increase the cost of
construction projects, which will require that developers charge higher rental
rates to recover their capital investments. We cannot allow that access to
affordable housing be impacted by this tariff increase.
Members of Nersa are required, in terms of
section 9(f) of the National Energy Act, 40 of 2004, to act in the public
interest in the fulfilment of their duties. The City of Johannesburg is of the
opinion that approval of the proposed increase will be a gross dereliction of this
legislatively mandated duty to act in the public interest.
I will be leading a delegation of City
officials to the public hearings which are to be held in Gauteng later this
week to further elaborate on the City's objection to the proposed tariff increase.
- Herman Mashaba is executive mayor of the City of Johannesburg.
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