Council sticks to Eskom increase
The eThekwini Municipality has assured consumers it will limit the electricity tariff hike to the 9.4% increase granted to Eskom.
City Treasurer, Krish Kumar has confirmed that, unlike other municipalities, eThekwini would not add further increases to the hike approved by the National Energy Regulator of South Africa (Nersa).
“We are doing everything we can to cushion the impact this will have on the residents of our city. We will stick to Nersa’s guidelines,” Kumar said.
But the increase, which comes into effect in July, will still add to the burden on consumers, who are already facing sharp increases in food prices – brought on by a crippling drought, hikes in taxes and a 30 cents increase in the fuel levy.
Kumar acknowledged the increase was above inflation, but said it could have been worse.
“This increase is welcomed in the sense that it could have been higher. Eskom requested a much higher increase.
Considering that Eskom has managed to keep the lights on it is welcomed, but we understand that it is still higher than inflation. It will have an impact on consumers and we as a city will try our best to cushion the impact of the hike.
“We do have our challenges of infrastructure especially when it comes to expanding and providing electricity to all.
“Even after we factor in all these issues we will make sure that the increase is not above the 9.4%,” he said.
Electricity rose by 12.2% last year – 2% less than the 14.25% Nersa approved.
Consumer bodies and ratepayer organisations believe the latest increase will have a “devastating impact” on South Africans, especially the poor and the over-indebted.
Msunduzi Municipality spokeswoman, Nqobile Madonda, yesterday confirmed that consumers could expect an increase there of 8% to 10% .
Ina Wilken, vice-chairwoman of the National Consumer Union, said the increase would have a “huge impact for the ordinary man on the street”.
“People are struggling to make ends meet and yet they keep getting hit with increase after increase on living expense ” Wilken said.
Embattled parastatal, Eskom, wanted a 17% tariff increase but after nationwide public hearings last year, was granted a 9.4% increase on Tuesday.
Wilken said the above-inflation increase would drive the other costs up and could lead to companies retrenching staff.
“I don’t know why Nersa conducts public hearings into the increases because they simply do not listen to the man in the street.
“This is going to have a massive knock-on effect on the economy as it is not just people who will suffer but business too, which may be forced to retrench or scale down production to meet the increase,” she said.
Dharmand Nowbuth, of the Isipingo Ratepayers’ Association, said the poor would be particularly hard hit.
“This is not fair to the man on the street who is being forced to pay for the failures of parastatals such as Eskom.
“A 9.4% increase is not justified at all, especially when we see how much the executives at Eskom get paid. It is going to be a very tough year for people,” he said.
Neil Roets, chief executive of Debt Rescue, which helps people in financial distress, said most middle- and low- er-middle-class consumers were already at breaking point and this could be the straw that breaks the camel’s back.
“We know from previous experience that municipalities are going to add a hefty surcharge of their own to raise income for their fancy cars and overseas trips.
“More than 50% of all consumers in this country are three months or more behind in their repayments of at least one account, according to the National Credit Regulator, while many consumers owe more than 75% of their total income to creditors.
“The continuous drought and the likelihood of an e-toll hike on top of the multitude of increases resulting from the decrease in the value of the rand and inflation that has reared its ugly head is going to squeeze consumers to the maximum,” he said.
Pietermaritzburg Chamber of Business chief executive, Melanie Veness, was concerned about the increase.
“With businesses already experiencing a tight period, this hike could result in job losses,” she said. – Additional reporting by Sherlissa Peters
Power hike: more debt for households
“This electricity increase is un- affordable and households do not have the means to pay.
“This increase has been seen in the context of already severe financial strain on households and households having to take on debt to procure essential needs,” Abrahams said.
The Pacsa Food Price Barometer shows that prices for a basket of food bought by working class households had increased by 14% over the past four months.
According to Pacsa’s research, any increase in electricity would reverberate throughout the economy.
“Households will not be able to absorb this increase by cutting back on their electricity consumption because they are already using the barest minimum of electricity.
“We anticipate that households will be forced to source dangerous forms of energy such as paraffin and candles, with negative consequences for health, education and well-being,” he said.