South Africa is facing very tough times ahead and the chances of recovery are close to none, according to Black Business Council president Elias Monage.
His comments follow an announcement by the National Energy Regulator of South Africa (Nersa) on Thursday that it approved Eskom’s application for tariff increases.
Nersa granted Eskom an electricity tariff increase of 18.65% that will come into effect in April, as well as a further increase of 12.74% for 2024/2025.
This means the total electricity price increases will be over 30% in the next two years.
Eskom had initially applied for a 32% increase for the 2023/2024 financial year and an additional 9% for 2024/2025 in an attempt to recover more than R300-billion that the power utility has lost over the years.
Previously, the regulator approved an increase of 9.6% despite Eskom asking for an over 20% increase. Loosely translated, this means consumers will now have to fork out more to pay for their electricity bills.
During a media briefing on Thursday, Nersa said it was caught between a rock and a hard place in making the decision, especially considering dire economic challenges. However, it said that it has tried to strike the balance between the interests of the economy and the consumers.
Nevertheless, Nersa’s decision will only pile on the pressure on struggling South Africans including businesses, according to Monage, who said businesses are paying for Eskom’s inefficiencies.
“We are not looking at the 2023/2024 financial year only but the 2024/2025 period as well. It is a compound hike of 32% in a period of two years,” Monage said.
“It is going to suffocate businesses because we are paying for a service we do not get. With loadshedding in place, the recovery is basically zero. They cannot even meet the requirements to supply what they have manufactured as business operators.
“Businesses are basically paying for Eskom’s inefficiencies. You [Eskom] are not providing electricity, so what are you increasing the tariffs for?”
“Another impact is the increase on the cost of doing business. If we are going to absorb the hike, it means the cost structure goes up by that number, because we need to increase the cost of sale, so you need to recover whatever you are going to pay for Eskom.”
According to Monage, this is a blow not only for small business but every South African, considering the country’s economy that is still reeling from the Covid-19 pandemic and the raging inflation rate.
“We just came back from Covid where a number of businesses have closed down, workers are not recovering because with the blackouts some sectors have cut the working hours. Even those working from home are struggling. We are still going to see a big number of job losses.
“It is not only bad for businesses but workers too, remember they are also paying electricity where they are staying. There are also high prices of petrol, diesel and the rampant inflation. They are not going to recover, so we are facing very tough times ahead”.
Trade union federation Cosatu is in agreement with Monage.
“Whilst this increase is less than the 32% hike Eskom requested, it will still be devastating for the unemployed and those who are dealing with wage stagnation. It will be a further burden to companies struggling to keep afloat because of a stagnant economy,” said Cosatu in a statement.
According to Abram Mashishi, SA National Civic Organisation Greater Tshwane regional leader, the issue of Eskom’s finances has gone too far and is weighing heavily on ordinary South African who continuously pay for services which are not rendered.
“This is absurd. I am not sure where the country is going. We were complaining about unemployment, job losses and petrol hike. Now it is electricity, we are all frustrated,” said Mashishi.
“What is this increase based on because we are not even getting the electricity. As we speak, we are on stage-six loadshedding. Loadshedding affects a lot of things including businesses and communication.
Mashishi said the politicians are not concerned about loadshedding because they are not affected the same way as ordinary South Africans.
“Everyone is looking out for themselves, they do not care. These politicians drive big cars and live in expensive state houses. They don’t pay petrol from their pockets, they do not pay electricity from their pockets … it is a problem, they do not feel the pinch.”
Also read: Prepare to dig deeper for electricity bill starting in April
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