Mr Jacques Moolman, President of the Cape Chamber of Commerce and Industry.
The 12.74% tariff increase, while substantially less than Eskom’s requested 36.15%, is cold comfort for households and businesses already struggling to afford electricity, and which now face yet another above-inflation increase – with the likelihood of more to come.
Deliberations over the tariff hike also raise concern about Eskom’s balance sheet and ongoing municipal debt.
The Cape Chamber notes that arrear debt remains a troubling item on Eskom’s balance sheet. This debt includes arrears from municipalities. While Nersa correctly excluded this amount when considering the tariff application – because Eskom did not incur this expenditure – arrear debt nevertheless impacts Government finances and is a cost that invariably gets passed on to the consumer, in one way or another.
In our view the municipal debt escalation is unacceptable, partly because it is unsustainable for Eskom to be burdened with this municipal failure. We need to know Governments’ plan to deal with this debt. Who is going to cover it? We’ve already paid the municipalities for our electricity usage and we sincerely hope that the intention is not to recover it through taxes, because in effect we would then be paying for it again.
The last thing struggling households and businesses need is another ‘double taxation’ to offset the financial costs of Government inefficiency.
Despite the downward adjustment of Eskom’s proposed tariff, the 12.74% is significantly higher than the current inflation rate of 3%. Electricity prices have escalated by 1041% over the last 10 years. In addition, one needs to consider the compound effect of these kinds of increases – future increases are calculated off a higher base.
We are nevertheless pleased that the Regulator based its decision partly on input from the Association of South African Chambers (ASAC), a voluntary business umbrella body that engaged Nersa at a public meeting in Johannesburg. Our input contributed towards some of Eskom’s adjusted anticipated costs and revenue.
ASAC, of which the Cape Chamber is a founder member, was established in 2019 to lobby on key business issues impacting economic development. The private sector has a critical role to play in devising sustainable solutions to the current power supply challenges.
We believe South Africa will continue to be menaced by further above-inflation increases unless Government urgently addresses municipal debt and other financial inefficiencies hampering efforts to improve service delivery.
