COSATU Congress of South African Trade Union : calls on Nersa to reject Eskom`s application for another electricity price increase

COSATU calls on Nersa to reject Eskom's application for another electricity price increase

26 January 2016

The Congress of South African Trade Unions (COSATU) totally rejects Eskom's application to the National Energy Regulator of South Africa (Nersa) requesting an additional 8.6% increase in the price of electricity, on top of the already approved 8% increase for 2016.

The federation feels strongly that any tariff hike will further burden an already overwhelmed working class. Our precarious economic conditions have hit the poor the hardest and that coupled with high levels of unemployment and poverty will strangle those, who are at the bottom end of the economic pyramid.

During his 2012 State of the Nation, President Jacob Zuma raised concerns about the negative impact of high electricity prices on the poor households and the economy generally. The president said,: 'There is an ongoing concern from business and communities about high electricity costs. I have asked Eskom to seek options on how the price increase requirement may be reduced over the next few years, in support of economic growth and job creation and give me proposals for consideration. 'We need an electricity price path that will ensure that Eskom and the industry remain financially viable and sustainable, but which remains affordable especially for the poor.

We support the president's statement made in 2012 and maintain that it is government's responsibility to ensure financial sustainability of Eskom. Eskom is not a private enterprise but a state owned enterprise with a huge developmental mandate.

COSATU reiterates its previously expressed views that high electricity tariffs destroys prospects for SMEs; and forces low income consumers to substitute electricity with dirty energy.

The poor will be burdened with huge arrears ,as they fail to pay their bills and will experience more disconnections and illegal reconnections. The federation represents millions of underpaid ordinary workers, who can barely afford these outrageous increases in the prices of basic services.

The increases in prices of basic services negates the good work the democratic government has done since 1994, in rolling out electricity and other basic services to millions of working people ,who had been excluded to these services by the evil system of apartheid.

The 50kWh monthly free basic electricity government has been providing to poor households is not enough to cushion the poor from these electricity price increases; thus forcing them to use dirty and dangerous sources of energy for cooking.

Steep electricity tariffs will have a negative impact on the objectives contained in the beneficiation strategy, industrial policy action plan, new growth path and government's infrastructure development programme. We have no doubt that high electricity prices will result in job losses, push up prices of basic commodities, including food.

COSATU is also concerned that since the introduction of the multi-year-pricing system for Eskom, it has been easy for Eskom to get a further increase before the end of the multi-year-price determination period. This trend has the potential of creating a credibility crisis for Nersa's multi-year price determination system.

COSATU refuse to see workers being made to pay and take responsibility for bad policy decisions of the late 1990s ,when government intended privatising Eskom and didn't allow the entity to invest in electricity generation infrastructure. The working class and the poor cannot be made to pay for such errors committed by government which wanted to follow the advices of the World Bank and the International Monetary Fund.

Government, as a shareholder, has a responsibility to fund Eskom and ensure that allocated funds are spent efficiently.

Sizwe Pamla (National Spokesperson)
Congress of South African Trade Unions
110 Jorissen Cnr Simmonds Street
Braamfontein
2017

P.O.Box 1019
Johannesburg
2000
South Africa

Tel: [phone] Direct 010 219-1339
Mobile: [phone]
E-Mail: [e-mail]

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