Power price hikes add to perfect economic storm

FF Plus

Power price hikes add to perfect economic storm
Power price hikes add to perfect economic storm

The increase of 8,61% for municipalities and 9,61% for direct consumers that NERSA approved for Eskom contributes to the perfect storm that is brewing for South African consumers and taxpayers.

Municipalities must now decide on the increase that they will implement to cover Eskom’s higher price and consumers must prepare themselves for paying approximately 17% more for power in the near future.

NERSA must also approve these municipal increases, which are expected to be in line with the 17,80% increase that NERSA approved last year.

Given many municipalities’ dire financial positions, it goes without saying that most of them will attempt to obtain approval for the biggest possible price hikes.

Higher power tariffs will impoverish residents even further, which will result in more non-payers and ultimately, municipalities will be much worse off financially. Local economies cannot grow with unaffordable and unreliable power supply.

The tariff increases approved for Eskom must also be seen against the backdrop of the lifelines, amounting to billions of rand, that the government extends to the power utility year in and year out. In the 2020/21 financial year alone, these lifelines amounted to R56 billion.

These funds come directly from taxpayers and if it were to be calculated as part of Eskom’s annual tariff hike, the percentage would be much higher.

This, in conjunction with other price increases for essential consumer goods, like fuel and food, leaves South Africa facing an expected inflation rate of 4,45% for this year, according to market researcher Trading Economics.

The projected economic growth rate for this year is barely 1% and only 0,60% for 2023. In addition, the ongoing war in Ukraine could make these projections far worse.

At municipalities, a handful of loyal payers of taxes and service fees are expected to carry an almost impossible burden, while clouds of economic doom gather above their heads.

This perfect storm is the result of sheer incompetence, and corruption on every level of government and at every institution where the ANC is involved.

When it comes to Eskom, drastic and urgent restructuring is needed. Equally urgent is that a new government must come to the aid of this country and save it from utter ruin.

Read the original article in Afrikaans by Michal Groenewald on FF Plus