ESKOM's proposed electricity price increase was slammed by Eastern Cape business and labour during the National Energy Regulator of South Africa's (Nersa) public hearing in Port Elizabeth yesterday.
Representatives from business, agriculture and worker unions vehemently opposed the proposed 16% increase every year for the next five years, with some labelling it an "abuse of funds" which would have "catastrophic effects on the Eastern Cape economy".
The hearing, held at the Eastcape Training Centre in Zwide, was the second attempt by Nersa after the first hearing was disrupted by workers who believed it was not accessible to all residents of the city.
Opponents of the hike believe it will lead to businesses closing and job losses, food producers exiting the market because of added expenses and force electricity users to instead use dangerous fuels like paraffin or candles.
Agri Eastern Cape vice chairman Wayman Kritzinger, who represented 3000 commercial and emerging farmers, labelled Eskom's hike as an "abuse of funds" to pay "massive salaries and wages and make huge profits".
"Just imagine seeing a notice at a shop that all prices will go up by 20% because they want to build another store," said Kritzinger. He said if prices kept increasing, farmers would halt production because it was no longer financially viable, forcing the country to become a net food importer.
He suggested Nersa allow price hikes "in the single digits" – at "inflation plus 1% or 2%".
National Union of Metalworkers of SA (Numsa) national treasurer Mphumzi Maqungo agreed that the increase should be "inflation-linked" and said the impact of the tariff increases would have a devastating effect on the economy, particularly in the Eastern Cape where unemployment levels were among the highest in the country. He claimed that recent electricity price hikes had forced about 80 companies in Nelson Mandela Bay and Buffalo City to close.
For many decades South Africans enjoyed low electricity costs, mainly due to vast coal resources, and in the 1990s Eskom concluded a pricing agreement with smelters which contributed to a boom in the economy, he said.
"The point I'm making is that this has worked in the past and should be considered now," said Maqungo.
Head of the Nelson Mandela Bay Business Chamber's strategic resources task team Angus Clark highlighted that although Eskom's prices were cheap compared to the rest of the world, the Bay's prices were comparatively expensive. He suggested Nersa address the mark-up by municipalities and consider a pricing strategy.
The last tariff hikes saw local high-energy users cut 922 jobs – a total of 20% of their workforce. If the new proposed increases were accepted, these businesses would be forced to close down completely, he said.
Domestic users were currently paying just under R900 for 750kW per month which, should Eskom's hikes be allowed, would be about R2000 come 2018, he said. Small businesses currently have an electricity bill of about R48000 a month, which could mushroom to over R100000 within the next five years, he said.
He suggested that Eskom be subsidised from environmental tax and VAT paid on electricity to provide a buffer against severe tariff increases. Currently environmental tax is around R9-billion while VAT is about R17.4-billion.
Cosatu provincial secretary Mandla Rayi said the tariff increase would have "disastrous consequences" for workers and the poor. If the proposal was accepted it could lead to electricity users reverting back to using dangerous and environmentally harmful fuels, including paraffin and candles.
Eskom's regulation and governance manager, Mohamed Adam, agreed Eskom could do more in terms of efficiency and committed to a R30-billion savings over the next five years.
"There is room for improvements," said Adam.