DA condemns damaging Eskom tariff hike; calls for significant energy sector reform

Sejamothopo Motau, Shadow Minister of Energy
25 June 2009

Today’s decision to grant Eskom a 31.3% tariff rise for the 2009-10 financial year illustrates the failure of the ANC’s policies that have promoted an uncompetitive, inefficient energy sector. The Democratic Alliance (DA) has stated repeatedly that a tariff hike of this nature will have vastly detrimental consequences for South Africa’s poorest citizens, and we are deeply concerned that government is sitting idly by while the fundamental problems within Eskom, and the energy sector more broadly, are not adequately addressed.
 
That Eskom faces severe funding problems is not in dispute, but a 31.3% rise in tariffs is cause for serious concern – particularly when considered alongside the fact that Eskom’s management has received bonuses of over R50m over the past four years. A hike of this severity, on top of the 27 percent levied not so long ago, and the possibility of further increases in the near future, will have a severe effect on the welfare of consumers, but particularly those at the bottom of the ladder.
 
The solution to our energy sector woes is not an endless sequence of ad hoc tariff rises, but real root and branch reform of the energy sector. We need to review the way in which Eskom itself is managed and funded, but also the broader issue at play, which is the chronic failure of a state-owned enterprise to provide South Africans with an efficient, reliable and cost-effective service.
 
In light of this we believe that Eskom’s monopoly, as sole producer and distributor of power, should be revisited urgently. In order to provide low-cost power supply that is available to all South Africans, we must create opportunities for the private sector to enter the electricity generating market.
 
The DA has also repeatedly stated that we believe that an independent commission of inquiry was needed to assess Eskom’s management and its current and future production capacity. In the absence of this, we cannot agree with today’s decision.