This is according to Flip Buys, the chief executive of Solidarity trade union, which was hosting a conference on Thursday on the record-high proposed electricity tariff hikes for the next three years.<\/p>\n
“If Cadbury’s needed to build a new chocolate factory, the company wouldn’t increase the price of its chocolates by 35 percent per year to pay for the new factory,” Buys told the conference in Pretoria.<\/p>\n
“Even though it may want to do so, the company would be eaten alive by its competitors. It therefore gets financing for the factory through loans, by selling shares in the company or through partnerships.”<\/p>\n
Buys was referring to the tariff hike application by Eskom to the National Energy Regulator of SA for increases of 35 percent per year for three consecutive years. Its first application was for 45 percent, but it has since reviewed that figure to 35 percent.<\/p>\n
Several economists, including Mike Schussler, were scheduled to speak about this at the Solidarity conference.<\/p>\n
Buys said Solidarity’s solution to Eskom’s problems was an alternative funding model.<\/p>\n
“We therefore propose a funding model where money is obtained through investments and loans, and compensation is paid over a period of time by means of dividends and repayments that are made possible by realistic electricity tariffs,” said Buys.<\/p>\n
“It seems to me that Eskom wants the easy way out by increasing its tariffs by an irresponsible margin over the next few years in order to pay for the expansion of new generating capacity.”<\/p>\n