New Eskom hikes could push farmers off national grid - farm body

Cape Town – Wine farmers have already turned to solar power to meet the energy needs of their operations as Eskom's electricity prices soar, and the trend will spread to the rest of the agriculture industry, Agri Western Cape has warned.

Agri Western Cape CEO Carl Opperman on Monday represented the industry association's views on Eskom’s application for claw-back tariffs amounting to R66.6bn. The National Energy Regulator of South Africa (Nersa) is holding public hearings into the matter for the next three weeks.

Opperman explained that tariff hikes will add cost pressures to the food industry, which is already in a tight corner as prices are negatively impacted by the drought in the Western Cape.

The drought has resulted in 50% less onions and 80% less potatoes being planted. This has translated into a R40m loss of wages for agricultural workers, according to Agri Western Cape. Opperman emphasised the negative impact higher costs have on employment.

Asked by the Nersa panel what the immediate impact of the tariff hike may be on agriculture, Opperman said farmers are increasingly looking to go off the national grid.

“Wine sellers are off the grid,” he explained. These farmers have opted to use solar energy. “That is more cost effective than being with Eskom at this point in time.” These alternatives also offer more stability for farmers, he added.

Opperman explained that farmers are price takers and cannot necessarily pass on higher costs to consumers - they will have to absorb the costs.

Three-year claw-back too big

Eskom’s claw-back dates back three years to 2014/15. Opperman raised concerns over the fact that Nersa is presiding over a decision relating to past events. He said farmers do not have the luxury to claw back their losses from consumers for events which took place in the past.

“A three-year claw-back of R66bn is a massive amount to claw back. To get this from an economy that is not growing is a big challenge to address.”

Agri Western Cape wants Nersa to tighten its oversight over Eskom by having more frequent interactions with the state power utility.

“We would like to see more experts or better interaction between Nersa and Eskom to manage situations.”

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.76
(-0.05)
ZAR/GBP
21.18
(-0.23)
ZAR/EUR
18.94
(-0.09)
ZAR/AUD
11.65
(-0.04)
ZAR/JPY
0.16
(+0.04)
Gold
1798.11
(+0.03)
Silver
18.69
(+0.17)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1967 votes
I am taking a hit, but should be able to recover in the next year
23% - 2578 votes
My finances have been devastated
34% - 3826 votes
It's still too early to know what the full effect will be
25% - 2757 votes
Vote