The price hike would hit South Africa’s economy “just when it should be coming out of a recession”, Busa said.<\/p>\n
On Tuesday, Eskom’s CEO Jacob Maroga announced the utility had submitted a request to the National Energy Regulator of SA (Nersa) for a tariff hike of 45 percent every year for three years.<\/p>\n
Busa said the proposed increase would be “bad for inflation, growth and small business in particular”.<\/p>\n
“Although the quota of free electricity would be raised to assist the poor, they would not escape the rise in costs elsewhere if inflationary pressure rose generally,” Busa said in a statement.<\/p>\n
The excessive burden of Eskom’s future funding should not be placed on higher tariffs, it said.<\/p>\n
“It is clear from recent consumer price inflation data that electricity costs are playing a major role in preventing inflation from falling faster.<\/p>\n
“This keeps interest rates higher than they otherwise need be and hampers economic recovery.”<\/p>\n
Busa said there was a need to revisit the “mix” of tariff increases, loan financing and additional state funding in the financing of Eskom.<\/p>\n
“These constant Eskom tariff ‘crises’ every few months are becoming bad for business confidence and planning.”<\/p>\n
Busa said in this context Nersa would not only have to critically interrogate the Eskom application but also encourage the urgent development of a new sustainable funding formula for Eskom for the future.<\/p>\n
“A new business model is also needed for Eskom to promote competition and encourage alternative suppliers of electricity in a restructured electricity market,” Busa said.<\/p>\n
Busa said it would be making submissions to the appropriate agencies on the various aspects of Eskom’s future in due course.<\/p>\n