NEWS & ANALYSIS

Eskom corruption rewarded with a 15.63% increase – Herman Mashaba

Mayor says NERSA's decision means municipalities will be forced to increase tariffs on electricity

NERSA rewards corruption at Eskom with a 15.63% increase 

14 May 2019

The City has noted the disappointing correspondence from National Energy Regulator of South Africa (NERSA), indicating that municipalities across South Africa will now face a 15.63% tariff increase from Eskom following continued tariff negotiations between Eskom and the energy regulator.

This is after NERSA had initially granted Eskom a hike of 9.41%, 8.1% and 5.2% for the next three financial years, below Eskom’s application for a 17.1 % hike for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22.

The decision means that the City of Johannesburg, like many other municipalities, will be forced to increase tariffs on electricity.

Despite the City Power’s efforts to absorb price increases arising from NERSA’s decision to grant Eskom a tariff hike, this will still result in a 13.07% increase in tariffs for the City of Johannesburg versus the 12.2% which had initially been modelled by the City, based on the initial tariff increase requested by Eskom.

The proposed 12.2% increase had been presented to residents as part of our proposed budget within our IDP sessions, contingent on the final outcome of deliberations between Eskom and NERSA.

For the City, the new increase is a represents a disappointing ruling which will only serve to add to further hardship faced by residents and businesses alike.

The City, amongst many other stakeholders across the country, had made representations to NERSA, stressing the concerns held by our residents and businesses in respect of the earliest proposed tariff increase. Around 45.2% of our residents exist, barely surviving, below the poverty line. Just over 900 000 of our residents are unemployed and the national economic growth outlook remains depressed.

Given the poor state of the national economy and the massive corruption at Eskom itself, the City, on their behalf of our residents, had argued that the proposed tariff increases were simply unacceptable.

These engagements resulted in Eskom receiving a 9,41% increase for the coming financial year. It appears though, this has not been enough for the state parastatal which has sought to squeeze out more from residents and municipalities.

It remains the City’s view that these increases serve only to reward maladministration and corruption which has gutted Eskom and resulted in recently witnessed rolling blackouts.

Meanwhile, those who are responsible for the corruption and maladministration at Eskom continue to roam free without any consequences for the actions.

It would appear that the cost of this corruption and maladministration is to be visited upon ordinary residents, especially the poorest amongst us.

Given this, I will write to the South African Human Rights Commission, calling for an urgent investigation into this matter.

Ultimately, those most affected will be the poorest or the poor within our City - facing increased barriers to accessing stable and safe electricity for their households.

The efficient use of state resources is critical towards progressively meeting socio-economic rights of residents as found in the Constitution.

While access to electricity is not explicitly mentioned within the Constitution as a right, it forms a critical municipal service which local government is obliged to provide progressive access to.

To that end, the tariff increase only serves to reduce access to electricity for our poorest residents.

I hope to provide residents with an update on this matter soon.

Issued by Luyanda Mfeka, Director: Mayoral Communications, Office of the Executive Mayor, 14 May 2019