South African business associations see the latest tariff hike as “regressive” and say it will thwart efforts to grow the South African economy post Covid-19. As a response to the tariff increase, the associations are urging businesses to seek alternative energy sources so that they can preserve jobs — and their own companies.
The ruling will result in the average standard Eskom tariff approved by Nersa going up from 116.72c/kWh to 128.24c/kWh — an increase of 9.8% — as the first R23-billion is recouped. This will take place next year in April. This is on top of the 5.22% tariff increase the power utility had already negotiated for next year, and will bring the total increase to at least 15%.
Coovadia acknowledged efforts made to address the longstanding issues at Eskom by restructuring its whole operational structure. Mukoki said the chamber understood that Eskom was dealing with legacy issues but, should Eskom default on its debt, that would collapse the economy because there was no way the treasury would be able to afford a bail-out.
“We want Eskom to succeed — but the government needs to remove itself from managing state-owned enterprises [SOEs],” Mukoki said. She said the problem is that the investment structure in the 1970s created cheap electricity, because it was charged at its operating cost as opposed to replacement cost. “So it was enough to keep the generators running, but not enough to buy new generators,” Hamukoma said.
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