Hike final straw for consumers?
ESKOM: YET ANOTHER BAIL-OUT FOR POWER UTILITY
Consumers are probably now in the worst situation since the debt crisis of 2008: Neil Roets.
The 9.41% increase in the price of electricity granted to Eskom by energy regulator Nersa is going to hit both consumers and the South African economy like a ton of bricks.
Coming on top of a 4.41% hike already approved, this could be the straw that breaks the proverbial camel’s back, said Efficient Group Chief Economist Dawie Roodt.
“The bitter irony is that this increase, together with the other increases approved for the next three years, is not going to be anywhere near enough to save an Eskom that is broken and bankrupt,” Roodt said.
He said the only solution was for government to assume the R420-billion debt that Eskom owes, fire 30 000 employees, reduce salaries across the board and start from scratch.
“Eskom cannot be bailed out by consumers. The reality is that electricity consumption has dropped considerably over the years as more consumers switch to solar and other alternatives and will never return to their previous levels of consumption.”
If government assumed Eskom’s debt, it would represent close on 15% of the government’s total debt burden and ratings agencies have already signalled that this would lead to further downgrades.
“For the first time the full implication of state capture and the ANC’s gross mismanagement of the economy has been revealed in all its horror,” Roodt said.
Debt Rescue CEO Neil Roets said consumers were probably now in the worst situation since the debt crisis of 2008.
“There’s talk among some economists that the economy could shed as many as 150 000 jobs in the mining and industrial sector if Nersa goes ahead with this foolishness. One of the basic fundamentals of a healthy economy is a reliable and reasonably priced electricity supply and we are now falling short on both requirements.
“The fact that growing numbers of consumers are using credit cards to buy basic commodities like food tells you there is something wrong with the economy.
“An increase of almost 10% in electricity tariffs granted by Nersa on top of the 4.41% already granted is going to be a catastrophe, not to mention major fuel price increases waiting for us down the road.
“And if all of that was not enough, our esteemed president is now confirming that he plans to nationalise the SA Reserve Bank,” Roets said.
Coming on top of the economy’s paltry growth rate of 0.8%, with massive job cuts down the line as a result of further electricity price rises when Eskom attempts to implement the so-called “claw back” of R3.86 billion it allegedly lost during the 2017-2018 financial year and the acceptance of the fact that it was never going to collect the outstanding R17 billion owed to it by municipalities, the situation is beyond grim, Roets said.
“Total consumer debt now stands at close to R1.73 trillion.” – Supplied by Debt Rescue
Eskom is broken and bankrupt