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Numsa opposes proposed electricity tariff hikes

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18 January, 2013Numsa has rejected Eskoms’ proposal to the South African energy regulator for a 16 per cent increase each year for the next five years, raising concerns that workers and the poor will ultimately pay the price.

Energy regulator had agreed to 3 multi year price determination (MYPD) periods each for three years and the second MYPD is due to come to an end in March 2013. The National Union of Metalworkers of South Africa (Numsa) argues that Eskom’s proposal for the third MYPD to be extended from three years to five years is a ploy to extend the security period of these enormous tariff hikes.

The tariff increases will result in a 110 per cent increase, raising the price of electricity from the current 61 cents per kilowatt-hour to 128 cents per kilowatt-hour in 2017/18. 70 per cent of energy production is consumed by industry and mining and manufacturing companies will be hard hit by the increase, especially many energy intensive users where Numsa has a strong membership base.

Numsa is concerned that the massive rice increases will adversely affect local industries and companies will be forced to shut down or reduce the size of their workforce through retrenchments. The union has proposed single digit increase that is inflation based.

In his presentation to Nersa at the public hearing in Cape Town, Deputy General Secretary of Numsa, Karl Cloete said, “In a country with already shocking and unacceptable levels of unemployment we cannot facilitate the retrenchment of workers by allowing Eskom to deepen companies’ already severe financial strain and further erode their competitiveness.”

Numsa also raises concern on the impact this will have on poor households for whom the price increase will be far above inflation. These households will also have to faced increase costs of consumer good as a result of the hike.

Eskom’s proposal is based on the need to generate R1.1 trillion in revenue to cover its costs including a massive capacity expansion programme required as a result of poor planning and investment that led to a supply crisis and rolling blackouts in 2007/8.

Whilst Cloete recognises the necessity of the capacity expansion programme, he argues, “Citizens, the poor in particular and local industry cannot be punished with outrageous hikes to the point of deepening unemployment, poverty and inequality as a result of inaction or wrong policy choices by political elites.”

Numsa questions some of Eskom’s revenue requirements, including the accumulation of R43 billion over the proposed MYPD period for its sole shareholder, the South African government, which does not go to the fiscus but is returned to Eskom to bolster its balance sheet to achieve a good credit rating. 

Numsa plans to picket at all nine provincial hearings that will be held through the second half of January.