Eskom’s new hike request shocker

2015-05-09 09:16

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ESKOM has asked the National Energy Regulator for a further 12,6% tariff hike, which would take the total hike for the year to 25%.

And the decision, which could have huge ramifications for the country and the province’s manufacturing sector, needs to be made no later than May 15 — next Friday.

Local business leaders have said the sharp increase could destroy small businesses, many of which are already struggling to keep afloat in the face of increasing labour costs, threats of an increase in interest rates, and a dismal national growth projection of just more than two percent — a far cry from the five percent needed by the country.

And ratepayers believe the increase cannot be anything but bad news for households.

Nersa said in a statement ­yesterday that it is “considering the application taking into consideration the urgent need to stabilise the electricity network to avoid a possible total blackout and Eskom’s operational and financial challenges”.

The 25,3% increase for the year will consist of the already approved 12,69% plus a further 10,1% and a 2,51% increase in the environmental levy.

Pietermaritzburg Chamber of Business head Melanie Veness said: “Many SMMEs will not survive.

“We need to raise funds for Eskom. Simply passing the cost onto the consumer is the worst option.”

Veness said businesses will be “forced to innovate” and that “large industrialists will be devastated”.

“We will publically insist on ­consultation. Any unilateral decision will be completely unacceptable.”

But Nersa spokesperson Charles Hlebela said while the regulator would consider a consultation period, a decision on the increase would need to be made by next week Friday.

“The decision must be taken by May 15 in order for Eskom to meet National Treasury guidelines to table their pricing structure before ­Parliament.”

Durban Chamber of Commerce and Industry president Zeph Ndlovu said the state of the economy was not conducive for business.

“All our members understand that risk management is something they must accept, but energy supply is the biggest risk of them all, especially as we approach winter where further constraints on the grid could be ­likely,” said Ndlovu.

He said a “hefty double-digit increase is not sustainable” as the consumer is already “over-burdened” and small businesses would fold.

Enrique Crouse, CEO of Prilla Mills, Southern Africa’s largest ­independent spinning mill, said ­dealing with the increases was a “complex” issue.

“Our competitive advantage in this country was the low cost of electricity. Yet in a very short space of time there have been several increases, affecting our competitiveness.”

He said while high-energy ­businesses could make changes ­towards becoming more energy ­efficient, manufacturing businesses could only control some ­components. “Issues such as load shedding and technology being ­damaged by the constant on/off of power add further pressure.”

Crouse said the country lacks leadership and/or the need to create a favourable environment for ­business to flourish.

“You do feel like you are ­swimming up-stream,” he said.

Hiton Ratepayers Association chairperson Colin Johnstone said: “We must see whether the Msunduzi Municipality will absorb this ­increase or not, but somewhere, somehow someone must pay.

“We would mind less in paying the increase if Eskom was efficient, but sadly they are not.

“Our local businesses are going to struggle and it will put further ­pressure on our households.”

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