Electricity and fuel hikes in South Africa
Consumers had every right to feel hard done by the double whammy that is going to cost them dearly.
JOHANNESBURG – The price of Eskom electricity that increased by 14 percent on top of the substantial fuel increase are going to hit consumers like a ton of bricks.
Neil Roets, CEO of Debt Rescue, said consumers had every right to feel hard done by the double whammy that is going to cost them dearly.
“The fact that electricity is increasing at almost three times the rate of inflation is something that nobody in government seems to care about nor about the fact that a whole range of additional taxes and levies are being added to the petrol price to take it to a historical high.
“Consumers are no longer able to fund the lavish lifestyles and corrupt practices of our government who, despite yearly tariff increases, have shown to be unable to keep the lights on.”
Dawie Roodt, chief economist with the Efficient Group, said the Eskom tariff increase will be the first of many to come.
“Eskom is hopelessly bankrupt, it is corrupt and is massively overstaffed and the majority of their power stations would require billions of rand to get them to properly function.
“Without a doubt, they are simply going to keep on increasing their tariffs,” Roodt said.
Roets said the increase in both the fuel and electricity prices was not only going to hit consumers, but also the business community who relied on Eskom to keep their doors open and on fuel to keep goods and services running.
“This is without a doubt one of the most difficult periods that consumers have been subjected to for a very long time.
“We are seeing daily records being set by the number of distressed consumers who are knocking on our doors the be placed under debt review.
“For many, even that is no longer an option because they have become unemployed as businesses that employed them have had to shut their doors.”
The fact that ratings agency Moody’s decided to withhold its announcement whether it was planning to downgrade South Africa’s credit rating should be seen as only a temporary reprieve, Roets said.
“With the economy in its present shape, my best guess is that we are going to be downgraded which is further going to increase the cost of borrowing for the fiscus,” Roets said.
Roets said almost half of all consumers were three months or more behind in their repayments. The major culprits are credit and store cards followed closely by unsecured debt.
The only measure of relief for consumers who are in over their heads is the legally-binding system of debt review which allows deeply indebted consumers to repay their debts over a longer period of time in smaller instalments often at a discount.
– Personal Finance