Eskom price hike will damage small businesses

Eskom’s application to the National Energy Regulator (Nersa) for an additional 12.6% increase in the price of electricity will have enormous implications for the South African business sector and consumers, the AHi business chamber warned on Thursday.

Nersa said it would announce its decision on whether it will authorise Eskom’s application to hike tariffs by a total of 25.3% on June 29 2015.

“The tariff increases by municipalities will further add to the pressure on the small business sector, which is already struggling,” warned AHi CEO Christo van der Rheede.

The AHi urged all its members to attend Nersa’s public hearings and submit comprehensive presentations to oppose the increase due to the negative impact it would have on businesses.

Eskom claims the proposed increases are needed to cover the higher operational costs of its open cycle gas turbines and to pay for power provided by independent producers.

In Van der Rheede’s view these claims should be investigated carefully in order to firstly look at options like cutting operational costs and staff on all levels.

“South Africa’s economy is already under great pressure and excessive tariff increases will deter investments and could lead to large scale closure of businesses and unemployment,” warned Van der Rheede.

If Eskom’s tariff increase is approved, it would be a catastrophe for the consumer and would see millions more plunged into debt followed by a slew of bankruptcies for businesses and private individuals, Debt Rescue CEO Neil Roets told News24Live on Wednesday.

Independent economist Dawie Roodt said the planned increase was totally unfounded.

“I accept the fact that Eskom needs more money, but this could be found in greater efficiencies within the company rather than once again nailing the consumer.”

He said the utility’s current crisis was largely the result of abysmal management and a lack of leadership.

South Africa is considering either partially privatising Eskom or putting up some of its assets for sale in order to secure funding for the power producer and resolve an energy crisis, the Treasury said on Wednesday.

The proposal could revive previous plans to raise funds for the company, which is battling the worst power supply shortages since 2008 and faces a funding crunch as it races to bring new power plants online.

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