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16% tariffs hike will still hurt the poor, DA warns Eskom

ENERGY: Nersa has approved a 16% hike in electricity tariffs. PHOTO: sunday times
ENERGY: Nersa has approved a 16% hike in electricity tariffs. PHOTO: sunday times

THE DA has warned that allowing Eskom to raise electricity tariffs by 16% instead of the originally proposed 25.9% will still hurt the poor.

"A 16% price-hike is unviable, and creates high opportunity costs against competing priorities such as food security. This situation is frankly unjust," said DA's shadow minister on energy David Ross.

Ross said the poor spent a large amount of their money on food and electricity. He said against the current 6% inflation rate, the price hike was still 10% higher.

Last week the National Energy Regulator of South Africa (Nersa) approved an average price increase of 16% on Eskom's application for the tariffs review for the period April 1 2012 to March 31 2013.

Ross said he would also be writing to Nersa to find out if they were aware of deputy president Kgalema Motlanthe's announcement last week that Eskom prices would be planned over a 20-year period rather than the current three-year cycle.

Motlanthe told the National Council Of Provinces that an interdepartmental team had been established to consider the best approach for determining the next round of electricity tariff increases for Eskom, due to take effect from April 2013.

Ross said this announcement could be a good thing as it would help smooth out the price increases with the long-term financing that Eskom would need to raise for its build programme.

"We need to know if Nersa is aware of the announcement and, if so, what would be the pricing implications," he said.

Ross said an alternative funding model was needed for Eskom.

"Inexpensive electricity is a critical input to any business and the ultimate answer to poverty alleviation lies in the creation of small businesses.

"Government should therefore do everything in its power to lower the current barriers to entry and encourage entrepreneurial endeavour through lower electricity prices," Ross said.

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