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SMEs warned to brace for impact of higher electricity tariffs

11th April 2016

By: Anine Kilian

Contributing Editor Online

  

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Small business owners should brace themselves for the impact of higher electricity tariffs, which affects profits and ultimately the spending power of consumers, said First National Bank Head of Business Value Sanjeev Orie
 
He noted that the tariff increase, together with the use and availability of energy, was one of the biggest challenges that limited the productivity and growth of small businesses in the country.
 
“April will be a particularly difficult month as small to medium-sized enterprises (SMEs) come to terms with the 25 basis points hike in interest rates, followed by the increase in fuel levy and electricity tariffs,” he said.
 
He pointed out that, not long ago, businesses had struggled with load-shedding as power cuts disrupted operations, resulting in the loss of revenue.
 
“With power supply having stabilised, the focus has now shifted to managing costs, making it essential for small businesses to identify alternative means to reduce electricity consumption and lower their operating costs to unsure the sustainability of their businesses.”
 
Orie noted that investment in alternative energy solutions, like solar power, should be considered by SMEs that were committed to reducing their dependence on the grid.
 
Although solar power required a large capital investment, he said it could save businesses costs in the long-term, helping them to hedge against future electricity price increases and supply shortages.

This solution would further allow SMEs to benefit from incentives offered by the government for using alternative energy sources.
 
“When used effectively, solar power has been proven to significantly reduce electricity consumption. For example, a fuel station can use solar power during the day when the sun is shining and turn back to grid power at night,” he said.
 
 

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Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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