POLITICS

Cape Town rejects Eskom?s application to hike electricity price by 20,5% ? GHL

Mayor says the planned increase should be revised in line with inflation

City rejects Eskom’s application to hike electricity price by 20,5%

13 January 2022 

Yesterday, I wrote to Eskom’s CEO, Mr André de Ruyter, asking him to formally withdraw Eskom’s application to increase the price of electricity by 20,5% in the 2022/2023 financial year. Alternatively, I suggested to Mr De Ruyter that the application could be revised to bring the planned increase in line with inflation.

Capetonians simply cannot afford this increase. It is unfair, unaffordable and unjustified. Like the majority of South Africans, many Capetonians are struggling to make ends meet. The pandemic and national lockdown led to the closure of hundreds of businesses in our City and the loss of thousands of jobs. Our residents are faltering under the burden of the rising costs of energy, fuel, food, and basic consumer goods.

The consumer price index (CPI) is currently stated as 5,5%; this would have been a more reasonable tariff increase for Eskom. The price of electricity has risen by 307% over the past 13 years, far exceeding inflation. Despite paying more for power, South Africans have experienced an unreliable electricity supply — 2020 and 2021 were two of the worst load-shedding years on record. 

I acknowledged to Mr De Ruyter that under his management, much has been done to improve efficiencies at Eskom, and I applauded his efforts in this regard. I also acknowledged that Eskom clearly needs to take further urgent steps to reduce its debt and improve its financial sustainability. However, passing the bill on to struggling consumers should not be the default solution.

Several alternative strategies have been suggested to Eskom. These include:

- Urgently reducing Eskom’s bloated payroll;

- Cancelling tenders with unscrupulous suppliers who provide Eskom with goods and services at massively inflated prices;

- Ending corruption and mismanagement (irregular, fruitless and wasteful expenditure cost the utility R14,6 billion in 2020 and R7,4 billion in 2019);

- Recovering money that has been looted during the period of state capture; and

- Adopting a greater focus on recovering debt from defaulters rather than targeting those who are paying their bills, who have in effect become ‘soft targets’.

The law requires the National Energy Regulator (Nersa) to table the 2022/23 price determination in Parliament by no later than 15 March.  This means there is still time for Eskom to urgently revise its application. The City will petition SALGA members, Nersa, and other stakeholders to oppose Eskom’s application if they fail to revise it.

It is an extreme injustice that ordinary Capetonians — and, indeed, residents of every municipality in the country — will be forced to bear the cost of Eskom’s inability to fix its own problems. Moreover, the planned increase will further limit struggling businesses’ ability to operate profitably, and to sustain and create jobs. It will destroy hope of economic recovery in South Africa and add to our burden of poverty. 

I hope that Mr De Ruyter will do the right thing and withdraw Eskom’s application for the price hike immediately.

Issued by Greg Wagner, Spokesperson to the Mayor, 13 January 2022