The Congress of South African Trade Unions (COSATU) notes with deep concern the National Electricity Regulator of South Africa (NERSA)’s approval of above 8% electricity tariff hikes for the next three years.  Whilst we appreciate that this adjustment has been done to assist Eskom to recover its costs, it is unhelpful to working and middle-class families, SMMEs and industry, the economy and ultimately Eskom itself.

Workers are already battling to cope with the rising costs of living and the goods that consume most of their salaries, e.g. electricity, transport and food increase far above the nominal inflation rate which is currently 3.5%.  These hikes are depleting workers’ already meagre and overstretched salaries, which often are not adjusted for inflationary erosion by employers.

These hikes will deny further money to an economy that has been stumbling along at 1% growth for two decades and is in desperate need of stimulus.  It will make it more difficult for consumers to buy the goods businesses produce and thus further compound our economic stagnation.

This hike by NERSA undermines the ongoing and already complex discussions between the Presidency, the Ministries for Electricity and Energy as well as Trade, Industry and Competition with Eskom and heavy intensive industries on a reduced electricity tariff that can enable smelters and other embattled sectors to keep their operations going and save their employees’ jobs. 

Whilst we appreciate and sympathise with the need for Eskom to balance its books, this must be done by plugging the billions lost annually to wasteful expenditure, corruption and criminality, and in particular tackling the soaring municipal debt owed to Eskom, currently at R100 billion and rising by R20 billion annually. 

Adjusting tariff hikes by amounts far outstripping inflation since 2006 is not a solution. It is a death spiral that consumers, businesses, the economy and Eskom can no longer afford. These hikes must be reconsidered alongside a package of interventions that tackles the R100 billion municipal debt crisis and moves all consumers to prepaid billing.  Placing pasters on a life-threatening wound has never been sound advice.

Issued by COSATU

Matthew Parks (COSATU Parliamentary Coordinator)
Mobile: 082 785 0687
Email: matthew@cosatu.org.za