Salga: Power hikes may cause financial collapse of councils

Salga says Eskom’s tariff hike may cause municipalities to cave under the financial pressure.

JOHANNESBURG - The South African Local Government Association (Salga) has warned Eskom's proposed electricity tariff hike may result in the financial collapse of many municipalities. 

Salga made its representation at the National Energy Regulator of South Africa's (Nersa) public hearings taking place in Midrand today.

Eskom requested that the price of electricity increase by an average of 16 percent over the next five years. 

Salga’s Subesh Pillay says municipalities are already struggling to collect revenue from consumers.

He says the proposed hike will push municipalities to the tipping point.

“They would not be able to meet their basic expenses relative to their revenue.”

Pillay warns the hike could fuel social unrest.

“Communities remain constrained in terms of their disposable incomes.”

Meanwhile, Eskom Chief Executive Brian Dames says a balance needs to be struck between the secure supply of electricity and the financial sustainability of Eskom. 

Dames says the tariff needs to meet the needs of industry and consumers.

Eskom has maintained it is keeping the increase as low as is feasibly possible.

The Congress of South African Trade Unions, the National Union of Metalworkers of South Africa and the South African National Civic Organisation are among the groups which will voice their concern over the proposed increases.

Some groups are also expected to protest outside the hearings.

(Edited by Tamsin Wort)