ESKOM HIKE 'MAY SLOW growth'

21Jan 2010: Jerry Vilakazi from (BUSA) Business Unity South Africa 

during the National  Energy Regulator of South Africa Public hearing PIC. ©  MUNYADZIWA NEMUTUDI. 21/01/2010
21Jan 2010: Jerry Vilakazi from (BUSA) Business Unity South Africa during the National Energy Regulator of South Africa Public hearing PIC. © MUNYADZIWA NEMUTUDI. 21/01/2010

ESKOM'S proposed tariff increase could delay the country's economic recovery, Business Unity SA chief executive Jerry Vilakazi said yesterday.

ESKOM'S proposed tariff increase could delay the country's economic recovery, Business Unity SA chief executive Jerry Vilakazi said yesterday.

"If the 35percent increase is accepted by Nersa, we can wave goodbye to an immediate recovery for South Africa's economy," he told a public hearing in Midrand organised by the National Energy Regulator of SA, on the proposed tariff hike of 35percent every year for the next three years.

While Eskom's proposed tariff hike would bring in R18,2billion for the first year for the parastatal, the country's economy could lose R80billion, he said.

Another consequence for a company such as a gold mine would be a R300million a year increase in electricity prices.

He said a 35percent hike could lead to consumer price inflation rising 1,2percent.

"And the pass-through effects would hit food prices."

Vilakazi said Busa did not believe tariff hikes were the only means whereby Eskom could continue supplying electricity. "Money for Eskom is available out there if the right conditions prevail."

He suggested the regulatory environment for electricity needed to be discussed and that independent power producers be given an enabling environment in which to operate.

Vilakazi said Busa wanted a national consensus between the government, organised industry, labour and Eskom on the utility's future capital expenditure-funding policy.

However, the shareholder needed to participate further in funding.

"The shareholder (government) must provide further equity injections to support its investment in Eskom. The basic principle in any business is that the shareholder puts his money in and if he is unable to do that, he seeks partners."

Vilakazi said Busa further advocated that Eskom reduce its expenditure growth by 1percent a year.

"If this was done it could generate a saving of R5,6billion up to the end of March 2015."

Eskom's funding model should strike a balance between tariffs, debt and the injection of government funds.

Earlier, Eskom's acting chief executive Mpho Makwana said it was in the national interest for Nersa to "choose appropriately" when deciding on the tariff hike.

"I have addressed hearings in eight provinces now and I still say the right decision is simple, 35percent, 35percent, 35percent." - Sapa

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