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'Shelve' power hike

By unknown | Apr 23, 2008 | COMMENTS [ 0 ]

Brendan Boyle

Brendan Boyle

The country's biggest association of business leaders said yesterday Eskom's application for a 60percent tariff increase should be shelved until the corporation's internal problems have been assessed.

"We do not believe Eskom has the capacity to respond unilaterally to this crisis," said Business Unity South Africa (Busa) chief executive Jerry Vilakazi.

He said Busa had written to the National Energy Regulator for South Africa asking that hearings on Eskom's application for a price increase from May 1 be suspended.

He said Eskom had been open about all the issues driving the power crisis, which has resulted in serial blackouts that have crippled many small businesses.

Busa accepted the need to raise prices to levels at which private producers could join the power supply network, but opposed the increase Eskom says it needs to cover costs.

Eskom has said it wants to double the price of electricity over the next few years.

"The crisis is not really about price, it's about internal issues," said Busa's director for economic policy, Simi Siwisa.

Eskom critics believe the corporation has allowed generators to fall into disrepair partly as a result of the loss of skilled staff.

Vilakazi said South Africa needed government, business and labour to come together in a social compact to address the many challenges stacking up against the economy.

"There are many sacrifices that need to be made. These sacrifices need to come not only from business, but from labour too," he said.

Vilakazi said the nation's challenges had been compounded by the Reserve Bank's 50 basis point interest rate hike earlier this month.

Calling interest rates "a blunt instrument", he said Busa acknowledged the need to manage inflation, but believed the rate should have been held at 11percent until inflation pressures eased.


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