NERSA is forcing consumers to pay for Eskom’s sins

The Congress of South African Trade Unions is utterly opposed to the 9, 4 % tariff increase that NERSA has awarded to Eskom ,and strongly feels that consumers are being forced to carry the burden of Eskom’s inefficiencies. Workers and their families have already been slapped with increases in personal income tax last year and the fuel levy this year, and the costs of other basic services like health are also rising.

What is clear is that consumers can’t afford any further increases in the cost of living and will be devastated by this latest blow from NERSA, This will actually plunge even more people into poverty. Going forward these tariff increases will have dire consequences for the economy and job creation. This will be exacerbated by the fact that municipalities will also add on this increase and then all that will be passed on to the consumers.

Increases in the cost of living will leave also consumers with less disposable income, which will put the economy further in trouble. The importance of the purchasing power has been demonstrated in the relatively high economic growth rate and more job creation in other countries like the US.

Electricity is a very central part of the running costs of nearly all companies and at the rate that NERSA is awarding Eskom tariff increases, many businesses will start to retrench workers and very few businesses will get started. This will slow down economic growth even further and have a catastrophic impact on an already limping economy with high levels of unemployment, at more than 34%, and more than 50% of South Africans living in poverty according to Stats SA. We warn employers though not to use this electricity tariff hike increase as an excuse to retrench workers.

The public, including civil servants whose wage bill has become government’s favourite scapegoat for the economic ills of the country ,can no longer afford to subsidise Eskom’s out of control increases twice a year.  Eskom has been increasing electricity prices at 2 to 5 times the levels of inflation for more than 5 years now.  Workers are lucky if they receive increases in line with inflation.

The Minister for Energy must do her job and protect consumers from these exorbitant increases and also ensure that Eskom cuts its wasteful expenditure.  Eskom pleads poverty and demands massive price increases yet it can afford to give R40 million to the New Age for its breakfast shows, to spend R30 million on end of year parties and pay huge bonuses to clearly non-performing executives.

This crisis again points to the urgent need for government to massively invest in quick, affordable and safe renewable energy and to once and for all scrap the clearly unaffordable, dangerous and time consuming nuclear energy plans.

What government needs to understand and make clear to Eskom is that consumers cannot be expected to shoulder the whole cost of getting Eskom back on its feet. The recapitalisation of Eskom should be the responsibility of government through  the fiscus. Government, as the shareholder, must also intervene in a big way to help Eskom get out of its financial problems and to raise the funds needed. They must force Eskom to cut fat, improve drastically its revenue collection capacity and manage contracts effectively to address its financial problems.

COSATU reiterate its call on government to introduce radical reforms in our tax system to make resources available for infrastructure development, including the introduction of the super rich tax. Something drastic needs to be done to sort out the Eskom issues and the consumers cannot afford to pay for the sins of others.

Statement issued by COSATU, 1 March 2016