Eskom’s 35% tariff increase will shock economy

9 April 2018

The civil rights organisation AfriForum strongly condemns Eskom’s planned 35% electricity tariff increase. The National Energy Regulator of South Africa (Nersa) will on 21 June announce whether the struggling electricity giant is entitled to collect an additional R66 billion from consumers for unforeseen expenses.

Dr Eugene Brink, Strategic Advisor for Community Affairs at AfriForum, says Eskom and the government’s problems and mismanagement is too easily shifted down onto consumers. “Many of Eskom’s problems are self-made. Despite investigations and supposed corrective measures that are underway, there is still no clarity over how the electricity supplier’s problems will be addressed, except for burdening the consumer through higher electricity tariffs or taxes. The expenses are furthermore not unforeseen, but thanks to maladministration and mismanagement.”

According to Brink, Eskom must collect its debt from municipalities, curb corruption and also review the size and nature of its workforce and remuneration structures. “To increase electricity tariffs with more than 30% will hold exceptionally negative consequences for consumers, as well as have a wider ripple effect on the economy, food prices and inflation. It will ultimately leave normal people with less disposable income, while there are only vague plans from Eskom’s side to cut costs and inefficiency.”

Brink also criticizes Nersa due to concessions to Eskom. Nersa suddenly moved forward the hearing of three adjustment applications so that municipalities could include the new planned price increase in their budgets this year. According to the energy regulator this advancement is connected to ‘internal processes’. This is however an insufficient and obscure answer.

“In addition, Eskom’s state-guaranteed monopoly must be broken, and South Africa ultimately needs a more diverse electricity sector where more electricity suppliers can compete for market share. The consumers, economy, business sector and workforce will then be the victors.”

Issued by Natasha Venter, Media Relations Officer, AfriForum, 9 April 2018