Power utility Eskom’s push to increase tariffs was tainting Gauteng’s image as an investment destination, said Gauteng Economic Development MEC Nkosiphendule Kolisile on Wednesday.
“We must do something about this. I understand Eskom’s obsession with tariff increases . . . but it simply chases away investors,” he said at the groundbreaking ceremony of the new Gauteng Automotive Training Academy in Rosslyn.
“There is no way companies can pay such tariffs and be able to compete with companies in Dubai and sell their goods at competitive prices in London.”
Kolisile illustrated his point by referring to a Gauteng-based textile manufacturer which had seen a rapid increase in its electricity bill since 2008.
Engineering News Online spoke to the manufacturer, which preferred to remain anonymous, confirming that the company paid R60 000 a month for electricity in May 2008, which was the company’s peak season, moving to R350 000 in April 2012, the beginning of peak season, and an unnerving R340 000 in October, which was an off-peak month for the company.
Kolisile said Gauteng had “to respond to the challenge” presented by electricity tariff increases, adding that the provincial government was attempting to do so by means of talks with various parties, including municipalities, which usually added their own price demands on top of Eskom’s tariff hikes.
The National Energy Regulator of South Africa (Nersa) was currently mulling Eskom’s request for an average yearly tariff increase of 16% for the five-year period from April 1, 2013 to March 31, 2018, following on from several years of above-inflation increases sanctioned by Nersa between 2007 and 2013.
South African power prices have more than doubled over this period, with Eskom’s selling price having climbed from around 20c/kWh to 50.3c/kWh last year and 61c/kWh currently.
However, prices paid by municipal consumers were far higher and also less uniform. An Eskom study of the six metropolitan areas found that average prices charged to end-users were between 40% and 110% higher than the prices Eskom charged its direct customers.