Durban - It’s given that the National Energy Regulator of South Africa (Nersa) sanctioning a nearly 32% price increase over the next two years for Eskom to supply electricity will hurt consumers and companies in their pockets.
But residents’ associations, economists and others expect the price hike to have a boomerang effect and deliver a crippling blow to the ANC at the 2024 polls, as electricity is fast becoming a luxury item, which spells more doom and gloom for the poor.
Thembani Bukula, Nersa’s chairperson, announced on Thursday an approved 18.65% electricity tariff increase for Eskom to impose on customers for the period 2023/24, effective from April. For the period 2024/25, Nersa’s approved tariff increase was set at 12.74%.
The tariff hike in 2022/23 was 9.61%. Bukula emphasised the latest tariff increases came after considering factors like the Covid-19 impact, load shedding, job losses, inflation and the country’s economic condition.
Another issue they couldn’t ignore was the court ruling in favour of Eskom, where the power utility successfully argued that Nersa had failed for nearly a decade to follow appropriate methodology in setting tariff increases.
Daniel Silke, a political economy analyst, said the increases were a “double whammy” for South Africans and the ANC. “The beleaguered population now has to find extra rands for critical utilities like electricity. The knock-on effect will be substantial and likely to keep the inflation rate at higher levels instead of easing up,” he said.
Silke said it would also slow down demand for goods and services provided by businesses, which would ultimately create an economic depression. “I think that these heavy tariff increases, combined with load shedding, will be a particularly damaging combination for the ANC as it would not sit well with our critical electorate,” he said.
Silke believed it could also give rise to some sort of resistance and nationwide protests and open the door to more concerted opposition programmes. Silke noticed “absolutely no communication from the president to take the country into his confidence on the issue with a nationwide address”.
“There has been no indication that a State of Energy Emergency may be declared in order to allow for further resources to be spent on emergency supplies. “I believe, with the ANC already looking vulnerable, all these issues will make it even harder for the ANC to cling onto a 50+1% result at the polls,” he said.
Energy expert Chris Yelland said it was a massive blow for consumers, especially when some parts of the country spend a third of their day without power. Yelland said Ramaphosa announced a turnaround strategy for Eskom six months ago but there were only signs of it getting worse. “That’s what will stick in the throats of the public when they go to the polls,” he said.
Yelland said Eskom had “deep fundamental issues”, which would take many years to mend. He said Nersa didn’t have a choice in setting the tariffs they had, given Eskom’s crumbling state and the court ruling.
Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse (Outa), said electricity was fast becoming a luxury and the poorest of the poor would suffer the most, while the rich would go off the grid and Eskom would lose more customers in that way.
He said Eskom began to hit a serious downward spiral in 2008 through poor management and political meddling. “Power plants Medupi and Kusile were both priced as R70bn projects, but ended up being more than twoand-a-half times that amount,” he said.
“Rampant corruption and productivity dropping because the (staff) headcount increased by 50%, but without commensurate output increases, were some of Eskom’s problems,” Duvenage said stronger management at all levels in Eskom and the government’s intervention were needed to improve the fortunes of the power utility.
Don Perumall, chairperson of the Tongaat Civic Association, said they were “disappointed” with the price hike, and the service was inefficient, mainly because of corruption. “I think this could be the tipping point for the ruling party. If they don’t get their act together, we will see multi-party coalitions after the 2024 elections.
“If the government is unable to get the basics right (water, sanitation and electricity) including employment, how do we attract investors?” Perumall asked. Perumall said they had experienced recent economic growth in Tongaat with a new mall opening and another in the pipeline, and a KFC outlet springing up.
“Little developments in a little town like ours make a great impact, but now we have this negative outcome,” he said.
Vanessa Knight, chairperson of the Ward 36 Ratepayers Association (Durban North), said: “In eThekwini we have had looting, floods and lost jobs and money. Our holiday season was a failure due to the sewage issues.
People who were struggling before are being hit again and again. “Citizens need to mobilise and say ‘no’ with one voice to the government.”
EThekwini’s spokesperson, Msawakhe Mayisela, said they had to first undertake preliminary processes in light of the Nersa announcement before reaching a new electricity tariff that would become effective for their customers.
“Ours is an organisation that consults the public first before implementing any increment in the provision of basic services. We will digest these new developments and engage our clients,” said Mayisela.
SUNDAY TRIBUNE