Further bad planning by Eskom leaves the South African economy holding the torch

Hendrik Schmidt, DA Spokesperson on Minerals and Energy
17 March 2009

2008 was a calamitous year for Eskom, in which it failed to keep the lights on regularly. The announcement today that Eskom has yet to finalise its electricity tariff application for the next financial year is clear evidence that its poor corporate planning record has continued into 2009.  The electricity supply and its pricing are crucial in determining the competitiveness of our economy. This uncertainty has a hugely detrimental effect on service delivery and on South Africa’s attractiveness as an investment destination.
 
The Democratic Alliance (DA) calls on Eskom to release its pricing application to the National Energy Regulator of South Africa (NERSA) immediately.  There is speculation that given the difficulty in accessing international credit markets, the South African consumer will be shocked by a hefty increase in electricity tariffs so that Eskom can make up its shortfall in funding. The speculation is that the government is waiting until after the general elections to publicise this. 
 
In a sector in which its state owned enterprise monopolises 95% of electricity production, it is the duty of the ANC government to take responsibility for Eskom’s excuses in justifying its inability to plan for the future. The financial crisis is not an excuse. Eskom cannot afford to delay its pricing whilst its waits for a more predictable economic environment.
 
This confusion is compounding the effects of the financial crisis. Energy-intensive employers will delay investing in South Africa and creating much needed job opportunities until they know how much electricity will cost.  The pricing of electricity has an equally important impact on service delivery as municipal electricity tariffs are a key revenue contributor to local government. Without a pricing guide from Eskom, municipalities will be unable to project their own revenue streams and this will impact on how much they will be able to spend on providing services to their communities.