Agri SA says rising electricity tariffs are a major constraint for agriculture

By ANA Reporter Time of article published May 21, 2020

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JOHANNESBURG - The recent decision by the National Energy Regulator of South Africa (NERSA) to let state-owned power utility Eskom  recover R13.3 billion (about US$738 million) through higher electricity tariffs will hurt the country's already struggling agricultural sector, industry association Agri SA said on Thursday.

In a statement, Agri SA said the current trajectory of rising electricity tariffs was unsustainable in a country with a weak economy which has been exacerbated by a nationwide lockdown to try and contain the Covid-19 pandemic.

It pointed out that over 25 percent of the country’s food was produced by irrigation-reliant and energy-intensive industries, including horticulture, dairy, poultry, grains and agro-processing.

"The agriculture sector plays a crucial role to ensure that national food security requirements are fulfilled," Agri SA said. "In the context of Covid-19, it is even more crucial for agriculture to be able to provide sufficient and affordable food."

According to the association, agricultural expenditure on electricity in 2019 amounted to approximately R7.4 billion. 

It said alternative solutions as part of reforming the energy sector should allow for greater private sector participation and competition in the generation of electricity to make it more affordable.

Currently, Eskom supplies about 95 percent of South Africa's electricity, most of it coal-fired, but has struggled to meet demand over the past decade, owing to its dilapidated generating infrastructure.

In announcing its decision last Friday, NERSA said it had conducted public hearings in eight of South Africa’s nine provinces from February 3 to February 24 which afforded interested and affected stakeholders the opportunity to present their views, facts and evidence.

The energy regulator said it had balanced both cash-strapped Eskom’s interests and those of the public, in line with South Africa's Electricity Regulation Act.

- African News Agency (ANA) 

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