Eskom hikes test limits of resilience
IF A POLL were to be taken on the most unpopular entities in
South Africa today, Eskom would undoubtedly rank up there among the top contenders. Apart from presenting the most significant threat to the country’s economy, Eskom is a curmudgeon that never fails to rile and inconvenience with its load shedding.
This week’s announcement that it is going to get big tariff hikes in the next three years adds fuel to the fire. The National Energy Regulator (Nersa) has proclaimed that from April 1, tariffs will climb by 9.41%, then 8.1% in 2020 and 5.22% in 2021. Eskom had originally applied for 17.1%, 15.4% and 15.5% for the three years.
Next month’s hike comes on top of a 4.41% increase that Nersa approved in October 2018, meaning the effective electricity price rise is 13.8%, more than double the inflation rate. Consumers not getting power directly from Eskom can expect to pay even more as municipalities impose further charges when the new council rates come into effect from July 1.
Over a period of 10 years – from 2007 to 2017 – Eskom’s electricity prices have soared by about 356%.
This is testing the limits of resilience and compliance.
The latest round of increases will slow down the economy further and cost jobs as more small businesses collapse under the strain of the onerous electricity costs. Some analysts predict that the mining and industrial sectors could shed as many as 150 000 jobs as a result of higher electricity costs.
These hikes come in the wake of other increases that the South African consumer has had to contend with. According to the latest Reserve Bank figures, total consumer debt now stands at close to R1.73trillion as consumers resort to credit for survival. This makes us one of the world’s most indebted countries, according to a recent World Bank index. Higher electricity costs will impact the already diminished incomes of the poor and lower income groups.
With the country reeling from steep fuel price costs, a VAT increase and the weight of other tax burdens, Eksom’s tariff increase is bad news for the economy, which grew by a mere 0.8% last year.
Eskom’s fiscal woes are due to corruption, mismanagement and incompetence, for which everyone must carry the can. This is manifestly unjust.