South Africa continues to experience power cuts which are costing the country’s entire industry. As if this was enough burdens for the already struggling industry, the power utility has written an application to the National Energy Regulator to have an additional 12.6% increase in the price of electricity. This, The National Energy Regulator (Nersa) said it would publicize its verdict on whether it will approve Eskom’s application to hike tariffs by a total of 25.3% on June 29 2015.
Some analysts have argued that the tariff increase by municipalities will increase the pressure on the small business sector, which is already struggling. Companies like Ahi are encouraging their members to attend Nersa’s public hearings and submit comprehensive presentations to resist the raise due to the negative impact it would have on businesses.
The Eskom cited that the proposed increases are required to take into account the higher operational costs of its open cycle gas turbines and to pay for power provided by independent producers. Van der Rheede, a commentator said people should view these claims. He added that they should be carefully investigated order to firstly look at options like cutting operational costs and staff on all levels.
He argued that South Africa’s economy is already under great pressure and excessive tariff increases will deter investments and could lead to large scale closure of businesses and unemployment. If Eskom’s tariff increase is accepted, it would be devastation for the consumer and would see millions more plunged into debt followed by a slew of bankruptcies for businesses and private individuals, Debt Rescue CEO Neil Roets told News24Live on Wednesday.
Independent economist Dawie Roodt said the planned increase was totally unfounded. He said that he agreed to the fact that Eskom needs more funds, but warned this could be found in greater efficiencies within the company rather than once again nailing the consumer.
He said the utility’s current crisis was largely the result of awful management and a lack of leadership.
South Africa is considering either partially privatising Eskom or putting up some of its assets for sale in order to secure funding for the power producer and resolve an energy crisis, the Treasury said on Wednesday.
The proposal could revive previous plans to raise funds for the company, which is battling the worst power supply shortages since 2008 and faces a funding crunch as it races to bring new power plants online.