Eskom hikes scare off GSK

PHARMACEUTICAL giant GlaxoSmithKline has moved a major part of its manufacturing out of South Africa due to forecasts of a 35percent electricity tariff hike, an executive told the National Energy Regulator yesterday.

PHARMACEUTICAL giant GlaxoSmithKline has moved a major part of its manufacturing out of South Africa due to forecasts of a 35percent electricity tariff hike, an executive told the National Energy Regulator yesterday.

Devan Pillay, head of engineering at GlaxoSmithKline's manufacturing plant in Epping, Cape Town, explained to the Nersa panel that the mere forecast that the electricity tariff could rise by 35percent has been enough for the company to move a major slice of its manufacturing away from Cape Town - to Nashik in Maharashtra in India.

Pillay was speaking in the Western Cape at the energy regulator's public hearings, held countrywide, on Eskom's proposed tariff hike of 35percent every year for three years. The last of the hearings will be held in Gauteng today.

Pillay urged the Nersa panel not to raise the price above the level of inflation, and when pressed by Rod Crompton, a Nersa board member, he suggested that the alternative funding mechanism could be a tax increase.

"I believe that Eskom's sole purpose should not be for profit. It should be giving industry in South Africa the competitive advantage to compete with the guys in India, the guys in China, the guys in Russia," he said.

Also at the hearings yesterday, several organisations claimed in a joint statement that Nersa has already made up its mind to grant parastatal Eskom the tariff hike it has requested.

The Congress of SA Trade Unions, the SA Communist Party, the SA National Civic Organisation, the Young Communist League and the Treatment Action Campaign alleged that Nersa had "long ago taken a decision on this matter to grant Eskom their 35percent increase and these public hearing are meant to just comply with the law".

Nersa spokesperson Charles Hlebela said all hearings were being taken seriously.

"Nersa has not yet made a decision regarding Eskom's proposed tariff hike - the decision will be made on February 24," he said.

Tony Ehrenreich, the Western Cape provincial secretary of Cosatu, told the panel from Nersa that funding for Eskom's building programme must come not from tariff increases, which must not exceed inflation, but from taxes.

"Just look at the tax cuts that the Treasury has given to wealthy and upper-income earners in our country."

According to Eskom, tariffs have to be raised to help fund its R385billion expansion plan. - Sapa and I-Net Bridge

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