COSATU rejects and is deeply concerned about Eskom’s proposed massive above-inflation tariff increases
15 January 2019
The Congress of South African Trade Unions (COSATU) rejects and is deeply concerned about Eskom’s proposed massive above-inflation tariff increases of 29% for 2019, 13% for 2020 and 4% for 2021. This application comes as consumers continue to grapple with the high cost of living, compounded by the high price of transport as well as an increase in VAT.
What the federation finds even more upsetting is that this money is going to be used to cover the massive R419 billion debt incurred by Eskom through years of corrupt and incompetent mismanagement.
It seems like Eskom is oblivious to the simple fact that South African consumers, industry, and municipalities can no longer afford its continuous above inflation runaway tariff hikes.
Eskom pleads poverty and declining demand but all it is doing with its huge hikes is to force more and more consumers, industries and neighbouring countries to look for alternative energy providers.
If NERSA approves these hikes, the mining industry is likely to move off the grid and set up electricity plants at the mines. This could very well be the death knell for Eskom.
Eskom has for the past decade been selling the nation a story that above-inflation hikes will save it but nothing has changed, the utility is still a burden on the taxpayers. There is very little that has changed over the past decade, we have seen no solid and coherent plan to turn the utility around, or manage the escalating debt levels and eradicate corruption. We are yet to see a forensic audit of its legendarily corrupt contracts.
We welcomed the President’s appointment of a task team to address its Eskom’s crises because we were hoping and expecting to hear a coherent and practical solution to save the power utility. There is not even a statement from the Presidential Task Team and taxpayers are already being told throw more money into a money pit.
There needs to be a broader conversation around the future of Eskom and innovative solutions to fix the larger and structural problems that threaten to sink the power utility. The work of the Eskom sustainability task team, appointed by President Ramaphosa in December 2017, must look into this task and take bold decisive decisions that will save the utility from ruin, beginning with the nullification of the IPP contracts already signed until the task team recommends a business model for Eskom that will generate revenue and increase employment opportunities.
The federation is worried that even if Eskom were to be granted its economic recession-inducing increases, it would not solve its problems.
As workers are being told to pay more money to Eskom and yet there is not even a guarantee that jobs will be saved. We refuse to pay more to an institution that is not even promising to use this money to save jobs.
Eskom is also a victim of an unrealistic and impractical government policy that has seen the power utility being forced to subsidise the Independent Power Producers. This just compounds an already worse situation that was started by state capture, including the bad contract with Tegeta. Eskom continues to bleed revenue from illogical commitments such as the agreements signed as part of the Independent power producer program.
The cost at which Eskom is said to be purchasing energy and the price at which the utility is said to be selling the electricity to the consumers just does not make business sense. Eskom is in deep trouble and its liquidity hangs in the balance. This piecemeal approach (increase in tariff, Possible decrease in the wage bill) to generate revenue to the utility is not sustainable in the long-term.
Eskom needs a clear and sustainable business plan and model that should be based on affordable tariffs, boosting industrialization and growing new markets e.g. exports to Africa and electric vehicles. The Integrated Resource Plan is not the solution.
COSATU urges NERSA not to indulge Eskom’s recklessness. They must be granted tariff hikes in-line with inflation and be made to come with a credible plan to turn Eskom around.
Issued by Sizwe Pamla, National Spokesperson, COSATU, 15 January 2019
