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'Eskom hike to hit municipalities hard'

Johannesburg - Municipalities will bear the brunt of Eskom's proposed tariff hike, the SA Local Government Association said on Wednesday.

“This price hike will drive them to what we call a municipal tipping point... It will drive them to a point where they wouldn't be able to meet the basic needs of the public,” Salga working group chairperson Subesh Pillay told a National Energy Regulator of SA (Nersa) public hearing in Midrand.

He said many municipalities were already financially stranded and in debt to Eskom.

Salga municipal infrastructure services director Mthobeli Kolisa explained that municipalities would battle to maintain their Eskom bill, as things such as street lighting would be more expensive.

The proposed electricity price increase - a 16 percent price hike for each of the next five years - would more than double the price of electricity over five years, taking it from 61 cents a kilowatt hour in 2012/13, to 128 cents a kWh in 2017/18.

Kolisa pointed out that over 10 years (from 2007 to 2017) Eskom would have increased the electricity price 600 percent.

He argued that while the proposed tariff plan made provision for the poor, the middle class, who were currently able to pay for electricity, might no longer be able to do so in future.

“Review the increase and stretch it over 10 years instead of five,” Kolisa recommended.

He urged the panel to strike a balance with Eskom and municipalities and consider the implications.

The Nersa hearings, chaired by Thembani Bukula, are being held to gather views on Eskom's multi-year price determination (MYPD3) application.

Earlier, Eskom's finance director Paul O'Flaherty said it needed the increase to maintain revenue and cover operating costs.

He said if Eskom merely minimised operating costs, as had been suggested, the servicing of machinery would be neglected and there would have to be massive staff reductions. - Sapa

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