JOHANNESBURG – The South African Chamber of Commerce and Industry (Sacci) said a tariff increase may be necessary for Eskom but government needs to look for other saving opportunities to ensure sustainable business.
This week, the National Energy Regulator of South Africa announced that electricity prices will be increasing by 9.4 percent.
Sacci said this could have two consequences for businesses, the capacity to expand will be reduced, plus retrenchments.
Chief Executive Officer Alan Mukoki said the hike will have adverse effects on the economy.
“We want to urge the government to look for other savings opportunities. We know that they’re running a lot of mega projects in and outside of Eskom. And we know that internationally, a lot of these projects they do at times have budget overruns.”
Mukoki added Sacci must urge government to increase their capacity in managing those particular risks, to mitigate budgets overruns in the future.
BRACE FOR MORE HIKES
South Africans have been warned to brace for more electricity price hikes in the future, but Eskom said it’s still selling power at a low rate.
It’s about half the amount asked for by the parastatal, which had spent billions on diesel to operate open cycle gas turbines in order to keep the lights on.
Several organisations have raised concerns about the tariff increase, which comes into effect next month, saying it will have a major impact on consumers and business.
However, the 9.4 percent hike is just the first of many.
Eskom’s Khulu Phasiwe said prices will go up.
“Currently, we are also buying electricity form the independent power producers at about R2 per kilowatt hour and we are selling that electricity for 79 cents because that is the current price.”
LYNNE BROWN’S IDEAS TO HELP ESKOM
Minister of Public Enterprises Lynne Brown said she has some ideas on how Eskom can access more funds in order to put the utility on track to financial sustainability.
Brown said Eskom needs resources for its five-year plan, especially since it can’t rely completely on reimbursement via Nersa.
The minister said municipalities still owe Eskom money, but the utility will have to look at a financial sustainability plan.
“It cannot come from the fiscus, if it cannot come from the claw-back process, then it has to come from another source. I have a couple of ideas which I’d like to discuss with Eskom.”
She said she cautiously welcomes the tariff hike because it gives Eskom certainty around what it can expect, but she wants a report from the utility on how this increase will impact on its build.