DA calls on South Africans to reject the impending electricity tariff increase from Eskom

30 January 2021

The Democratic Alliance (DA) rejects the decision taken by the National Energy Regulator of South Africa (NERSA) to allow Eskom to recoup over R6 billion from consumers through tariff increases. It is projected that this decision will result in a 10,95% increase in tariffs, an above inflation increase that will increase the economic pain of consumers who have been hard hit by an underperforming economy and job losses due to Covid-19.

We now call on South Africans to write directly to NERSA and ask that the regulator reconsiders its decision to burden them with high electricity tariff costs, which will potentially be above the affordability range of most consumers.

While Eskom and NERSA argue about the correct allocation and implementation, the bottom line is that Eskom’s model is broken – along with much else in terms of operations, maintenance and governance.

The utility seeks to cover “efficient costs” from the consumer in line with past practice where Eskom borrowed money, charged consumers for electricity, and use the difference between finance costs and consumer income. It used that surplus to pay for operational costs, new investment and even dividends.

This is no longer possible – crippling debt, an inability to borrow in the market and a continued reliance on bailouts make the taxpayer and consumer the funder of last resort for a utility that is in a death spiral.

The proposed divisionalisation of the entity into Distribution, Transmission and Generation must be accelerated to pave the way for private sector involvement. In the absence of this, the death spiral will continue unabated and the brunt will be borne increasingly by consumers.

It’s time for government as the shareholder to wake up, lest we slide into increased debt and darkness.

Issued by Ghaleb Cachalia, DA Shadow Minister of Public Enterprises, 30 January 2021