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Cape chamber slams Eskom’s 20% price hike request ‘to pay for corruption’

| Economic factors

The Cape Chamber of Commerce has reportedly lashed out against Eskom’s bid to hike tariffs by almost 20% in the 2018/19 financial year, saying it objects to paying the price to cover the cost of corruption.

The chamber submitted a written letter to energy regulator Nersa, objecting to the proposed tariff hike, according to IOL. It said that a 20% hike was counter-productive, and would lead to a ‘death spiral’ – pushing more consumers to use less electricity and to get off the grid.

Further, the chamber said that the request for higher prices did not make sense, as Eskom was spending more money to generate less electricity at a time when the global spot price of coal was lower than last year.

According to chamber president, Janine Myburgh, however, the bigger issue the trust deficit, saying that the group strongly objects to tariffs covering the cost of irregular spending, corruption and mismanagement.

Investigations have revealed that Eskom has paid hundreds of millions of rands for contract work that was not done, with recent scandals pointing to as much as R1.6 billion that was paid out unlawfully.

“Tariffs are determined to cover the fair and legitimate costs of producing and selling electricity and nothing else,” she said.

“How does one deal with the trust deficit? It will be very difficult, but before we can even begin to approach the problem we will need complete transparency on all Eskom’s input costs, and the reports produced by the forensic investigations commissioned by Eskom,” Myburgh said.

The Cape Chamber of Commerce’s submission was made at hearings currently being held by Nersa on Eskom’s next round of tariff hikes.

The current 3-year tariff plan comes to an end on 31 March 2018, with the next hike to kick in from 1 April 2018. For the last three years, Nersa has allowed Eskom to hike rates by just 2.2% per year.

However, in 2018, Eskom wants a 19.9% tariff hike, on top of the ability to claw back R60 billion in lost revenue. This could lead to a massive tariff hike shock of 53%, according to energy expert, Chris Yelland.

Speaking to IOL, however, Yelland said that, historically, Nersa has never granted Eskom the price increases it wants, and will look at Eskom’s application in fine detail and take out charges that are not fair or valid.

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