State-owned power utility Eskom’s bid for above-inflation tariff increases is not justifiable nor sustainable in the current climate, Business Unity South Africa (Busa) said amid ongoing hearings into Eskom’s application for a 19.9% hike from April 1.
The pursuit of higher revenues without first examining the utility’s business model would add further strain to an economy that was already under stress and impact on inflation and employment.
“The proposed tariff increase is not acceptable on a number of grounds, including the immediate impact thereof on the economy and consumers and the longer-term impact on the financial stability of Eskom,” said Busa CEO Tanya Cohen.
Further, the “untenable” proposal failed to indicate how the pressure on the fiscus and on the individual consumer could be mitigated, she said during the National Energy Regulator of South Africa’s public hearings on Eskom’s revenue application for 2017/18.
“On the basis of a comprehensive analysis of the application, Busa believes the increase should not be more than consumer price inflation, and only on the basis that appropriate conditions are formulated to ensure that serious attention is given to addressing poor governance and corruption within the entity,” Cohen added.
Further, Busa reiterated its call for tariff applications of a duration of longer than a year, which could provide greater certainty.