Eskom business plan unsustainable

IT is common cause that Eskom is in crisis. However making South Africans pay much more for electricity is not the way to go about keeping our lights on nor will it help to grow this economy.

Eskom has applied to raise tariffs by an effective 25.3%, including the 2.5% that is the electricity levy.

This is bad news, particularly for businesses, many of which are struggling to compete globally or even keep their doors open.

Equally this is bad news for the unemployed and the poor who are often at the worst receiving end of such tariff hikes.

In Nelson Mandela Bay, companies have seen electricity prices increase fourfold in the last seven years.

Not only does this make it difficult for the city to attract much needed new investors, it has also made it near impossible for existing businesses to expand and create more jobs at a desirable rate.

A tariff increase of about 12% has already been approved by Nersa. The increase application is especially a bitter pill to swallow for consumers because it comes despite ongoing loadshedding which the government says will be around for at least the next two years.

Eskom explained this week that it needs a tariff increase of 9.5% just to buy diesel to keep the cycle gas turbines running to avoid or lessen the burden of load-shedding.

During the Nersa public hearings in Gauteng, Eskom acting chief executive Brian Molefe argued that buying diesel to operate the generators would cost far less than the ultimate damage loadshedding was doing to the economy. Be that as it may, we believe it is short-sighted to keep turning to already overburdened consumers to dig deeper into their pockets just to keep the country’s power supply going.

Eskom is running with ageing infrastructure which on the one hand needs constant maintenance, while it also has constantly to provide the massive megawatts of power needed per day.

This situation is unsustainable and all the more reason why the power utility needs a complete overhaul of its business model.