NERSA must explain Eskom tariff increase to Parliament
31 June 2014
The DA is extremely concerned about the impact that Nersa's latest electricity tariff increase will have on the South African economy, and in particular, our already struggling households and businesses. It is a move that will undermine job creation and hurt the poor.
Indeed, it is clear that South African consumers are once again being forced to bear the burden of Eskom's inefficiencies due to the monopolistic stranglehold that it continues to exert on South Africa's electricity sector.
We call on Nersa to come before the Portfolio Committee on Energy and fully explain the reasons why it saw fit to grant these increases.
This must include furnishing the committee with all correspondence between the body and Eskom, and clarify whether any alternative measures were considered, and specifically proposed to the state entity.
It seems likely that Nersa awarded this latest increase in an effort to stave off a further credit downgrade of Eskom next week to essentially junk bond status.
The DA believes, however, that the funding crisis at Eskom is due to major deficiencies at the state owned enterprise, which cannot be made the responsibility of already battling South Africans any longer.
Eskom has failed to recover approximately R2.815 billion owed to it by 51 municipalities across South Africa, with R1.55 billion of this debt being owed by only 7 municipalities.
Another major reason behind the funding crisis at Eskom is due to the continued delays in the building of Medupi power station. This has both led to Eskom not receiving any revenue from the sales of its electricity from that plant and the fact that it has had to run its diesel generators at a tremendous cost in order to keep the lights on.
There have also been far too many unplanned outages at its power stations which reveals the fact that proper maintenance has not been taking place. In the midst of this funding crisis and its own inefficiencies it is deplorable that the Eskom board was awarded almost R17 million in vested performance shares instead of directing all available funds to infrastructural development.
It is clear that South Africa's economy can no longer afford to be held ransom by Eskom. Reform of the sector is urgently needed. This can be done through the introduction of the Independent Systems and Market Operator (ISMO) Bill which will allow for the participation of independent power producers and can thus provide solutions to our electricity crisis by providing alternate producers.
It is telling that despite President Zuma's promises during the State of the Nation Address this year, and the existence of an already drafted bill, that no movement whatsoever has been made in tabling the Bill before Parliament.
The DA will continue to push for a comprehensive reform of our electricity sector, and do everything possible to ensure the ISMO Bill is passed, so as to ensure proper competition within the energy sector. This is the best way to protect our people and our economy from further price hikes.
Statement issued by Lance Greyling MP, DA Shadow Minister of Energy, July 31 2014
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