Exorbitant electricity tariff increase request a consequence of a moribund Eskom monopoly

Issued by Ghaleb Cachalia MP – DA Shadow Minister of Public Enterprises
19 Jan 2022 in News

Please find attached soundbite by Ghaleb Cachalia MP.

Eskom’s exorbitant 20.5% tariff increase request confirms that the entity’s tariff determination model is heavily biased towards rewarding Eskom’s inefficiency and non-performance while punishing consumers via high energy costs.

It is for this reason that the DA calls for a household-centric tariff determination model that factors in consumer price inflation, household income and energy poverty.

The bottom line is that South Africa is unable to afford Eskom’s failed monopoly. Tinkering on the Titanic will not save the day, especially when you are plagued by loss of skilled employees, inefficiencies, corruption, cost adding procurement and cadre deployment. These factors combine to distort the energy market and fuel spiralling energy costs.

We simply cannot allow Eskom to use its state monopoly to recoup inefficiently incurred expenditure through increased tariff increases. The entity’s distortion of the energy market is not a licence to ride roughshod on the back of consumers and burden them with systemically driven tariff price increases. Year on year failures to meet budgets and targets has resulted in a vicious cycle – for both hard-pressed consumers and the suffocating utility – as the utility sets sales targets and recoups shortfalls from consumers.

While the DA welcomes the regular assurance by the Eskom CEO, Andre Ruyter, that the unbundling of Eskom is on track, clarity is needed on the pushback from those holding Eskom debt. Bondholders are said to be forming a common front to protect their interests even as Eskom is taking steps to split into three entities.

Even as Eskom’s R392 billion of debt will remain under the holding company for now, some bondholders are of the view that it may be distributed across financially weaker units. This climate of uncertainty will inevitably lead to an increase in the cost of doing business leading to unfortunate outcomes such as the latest attempt to push the cost to consumers.

The DA fully supports the stance taken by Cape Town Mayor, Geordin Hill-Lewis, and other DA led metros across South Africa, to oppose the 20.5% cost of bulk electricity proposed by Eskom. If approved, the increase will worsen energy poverty in South Africa at a scale and magnitude previously unseen in the energy market.