Eskom has asked for a massive 19.9% electricity hike, which business said is to compensate for the financial woes at the power utility. File picture: Mike Hutchings/Reuters

Cape Town - Organised business has slammed Eskom for the steep increase in tariffs, fearing that it would leave businesses unproductive and consumers out of pocket.

Eskom has asked for a massive 19.9% electricity hike, which business said is to compensate for the financial woes at the power utility.

“It has become clear that wasteful spending and corruption are part of existing tariffs and it is time for consumers to claw back revenue that has been unjustifiably extracted from them,” said Janine Myburgh from the Cape Chamber of Commerce.

The chamber wrote to Eskom demanding that consumers who have been overcharged be compensated.

In a letter to energy regulator Nersa, Myburgh said a 19.9% increase in tariffs for next year (2018/19) would be counter-productive and lead to a further loss of sales and defections from the electricity grid.

“The result would be that Eskom would be trapped in a death spiral. Tariffs are determined to cover the fair and legitimate costs of producing and selling electricity and nothing else. We strongly object to tariffs that cover the cost of irregular spending, corruption and mismanagement,” she said.

Nersa gave the power utility the green light to hold hearings on the viability of such an increase.

Myburgh said, according to Eskom's annual reports, the utility had spent about R10billion on coal in 2007 and nearly R48billion last year to generate slightly less electricity, despite the fact that World Bank figures showed that the spot price for thermal coal in US dollars in South Africa was marginally lower in 2016 than in 2007.

Myburgh also pointed to Eskom’s admission of lying about multimillion-rand payments to the Trillian Capital which resulted in a trust deficit.

“How does one deal with the trust deficit? It will be very difficult, but before we can even begin to approach the problem we will need complete transparency on all Eskom's input costs, and the reports produced by the forensic investigations commissioned by Eskom,” she said.

Myburgh also said Nersa would not be in a position to determine fair tariffs without a detailed study of the forensic investigation reports being suppressed by Eskom.

Ted Blom from the Organisation Undoing Tax Abuse (Outa) said poor households are particularly vulnerable to high increases in electricity tariffs.

“It is important to protect these poor households from the full impact of the electricity price increase through targeted subsidies. To date, tariff subsidies have evolved in the absence of a subsidy framework and there has been very little analysis of the long-term impact on consumers, whether subsidy contributors, recipients, or even the economy as a whole,” Blom said.

Nersa spokesperson Poppie Mahlangu said: “Nersa can also confirm that it has received written submission from the Cape Chamber of Commerce.”

Eskom, however, did not respond to queries.

Cape Argus