Eskom price hike a threat to jobs
Regulator grants power utility increases as unions warn of looming retrenchments and financial hardships for consumers
‘‘ We are now covering the Eskom corruption that we were not part of
The decision to grant electricity tariff hikes to Eskom has raised fresh fears of job losses and financial hardships ahead for consumers.
The National Energy Regulator of SA (Nersa) announced yesterday that the embattled utility would be granted a 9.14% tariff hike for 2019/20, 8.10% for 2020/21 and a 5.22% hike for 2021/2022.
The announcement came as consumers are already battling to cope with increases in food and petrol prices.
Yesterday, Cosatu general secretary Bheki Ntshalintshali warned that the electricity hike would hit the poorest of the poor hardest.
“Unemployed people will mostly be affected by this increase and small to medium enterprises will soon be retrenching people,” Ntshalintshali said.
Economist at the Steel and Engineering Industries Federation of Southern Africa, Marique Kruger, said the decision was deeply worrisome.
“Job losses are definitely something that will happen,” Kruger said.
She said businesses would incur higher production costs resulting in lower production.
Kruger said given the current depressing business environment, an impending carbon tax, high petrol prices and additional logistics costs, Nersa’s decision did not bode well for business.
“Nersa has missed a unique opportunity to support businesses towards improving profits. A much lower tariff increase would have rendered businesses in the metals and engineering cluster much more attractive for both domestic and foreign direct investment, thus impacting positively on employment.”
Nersa said yesterday the tariff hike was granted to Eskom after its application was assessed and the public were given an opportunity to comment.
Thulani Gwala of the SA Food Security and Development Agency said the electricity increase is not fair.
“We are dealing with people who live below the poverty line and this will put more pressure on them. The price of food will also go up as shops will recover the costs of the electricity hike,” Gwala said.
Economist Azar Jammine said the impact of the tariff hikes will not be felt immediately but will result in intense financial pressures for ordinary citizens within the next five years. Jammine said the tariff hikes were much less than the 15% initially requested by Eskom, however, this means the power utility would need an extra R54bn within the next three years and this will most likely come from taxpayers’ pockets.
“Eventually taxpayers will have to foot the bill,” he said.
Deputy president of the South African National Civic Organisation Chris Malematja said the increases would be disastrous. “We are now covering the Eskom corruption that we were not part of.
“The increase comes at a time when we all see what is happening at the Zondo commission [into state capture].”