Nersa’s decision opens the way for energy sector reform

29 June 2015

The Democratic Alliance (DA) gladly welcomes today’s decision by the National Energy Regulator of South Africa (Nersa) to reject Eskom’s application for a 25.3% tariff hike for the 2015-16 financial year.

This decision ought to be hailed as a victory for all electricity consumers, for our economy and for every unemployed South African.

Despite ongoing pressure by government and the ruling alliance, Nersa demonstrated true independence today by refusing to be strong armed into exorbitant tariff increases that would have had disastrous consequences for our economy.

It is unthinkable that Eskom expected an increase of that nature which would have been an external shock to our economy, resulting in a massive reduction in jobs, an unsustainable increase in input costs, and the unavoidable closure of many small and medium sized firms across South Africa.  

In our submissions, the DA strongly opposed further tariff increases as they would be disastrous for our economy and job creation. This was echoed in last week’s Nersa public hearings by business, unions, opposition parties and civil society 

Load-shedding is robbing South Africans of their livelihood as investors lose confidence in the economy and the manufacturing industry is forced to cut jobs. The electricity crisis has already cost the economy billions and resulted in countless job-losses. Passing the problem on to consumers through above-inflation tariff increases adds insult to injury, and cannot be supported. 

This decision by Nersa paves the way for the long term reform of the energy sector in South Africa. The Department of Energy and Eskom should now heed the DA’s advice and seek reform in terms of breaking the Eskom monopoly through increased competition within the sector, an increased focus on renewable energy and the rejection of expensive nuclear energy

Moreover, the time has come for Eskom to seek funding from the private sector through the sale of a 30% equity stake in Eskom, to be listed on the Johannesburg Stock Exchange (JSE).

A public-private partnership of this nature will raise billions of rands, strengthen Eskom's financial position, introduce skilled board members to the parastatal, and improve overall management of Eskom.

Nersa has demonstrated strong and credible leadership and has withstood a barrage of political pressure, setting the bar for how other State-Owned Entities and public bodies should conduct themselves. 

Statement issued by Gordon Mackay, DA Shadow Minister of Energy, June 29 2015