Businesses reject Eskom's proposed tariff hike

Nersa is expected to make a decision on the proposed price hike at the end of the month.

Eskom's head office in Sunninghill, Johannesburg. Picture: Reinart Toerien/EWN

JOHANNESBURG - Businesses have come out strongly against Eskom's application for a tariff hike, saying the economic situation is already a huge burden.

The utility is asking for a 16.6 percent tariff hike, saying it needs to recover R22.8 billion, some of which was used to buy diesel to operate the urbines to avoid load shedding.

The National Energy Regulator of South Africa (Nersa) is expected to make a decision on the proposed price hike at the end of the month after holding public hearings across the country.

The hearings ended in Midrand on Friday.

Business Unity South Africa's Martin Kingston says an electricity price hike will have a major impact on businesses.

"We need to acknowledge that these price increases are not the only constraint on South African business, such as commodity prices, global interest, foreign exchange rates and capital flows."

He says investors also don't like surprises and Eskom needs to make its plans for the future public.

A number of other organisations are also against the utility's application saying reliable and affordable electricity is imperative for business, the mining sector and individuals

Energy advisor Ted Blom says the costs will be even greater if Eskom continues to use the open cycle gas turbines.

"Assuming that Eskom attempts to clawback over expenditure on OCGT at R8 billion and that's the current figure, the other R2 billion it's coal, for the remaining four years, that means there's an extra clawback of R32 billion on the diesel account. And that's a conservative estimate. It could be five to 10 times higher than that. The total clawback then will be close to R110 billion."

The Chamber of Mines has warned about the possibility of 40,000 job losses if Eskom's application is approved.