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Ruling opens door for Eskom to hike tariffs: Nelson Mandela Bay Business Chamber

Jun 7, 2017
Ruling opens door for Eskom to hike tariffs: Nelson Mandela Bay Business Chamber

The Nelson Mandela Bay Business Chamber on Wednesday expressed deep concern about a Supreme Court of Appeal’s ruling on Tuesday, which upheld the appeal of the National Energy Regulator of South Africa (Nersa) and Eskom against business in Nelson Mandela Bay.

This reverses a High Court judgment which had originally set aside an interim tariff increase in 2016. Eskom will thus no longer have to pay back a part of the 9.6% additional tariff increase that Nersa approved in 2016. Ultimately this will result in Eskom instituting major electricity price increases of up to 50% in 2018.

Essentially the Supreme Court is saying that it is not able to support the public when there is a failure on the part of Nersa, the regulator, to discharge its duties or if there is an abuse on the part of Eskom in terms of its rights or privileges, and leaves the function entirely up to the regulator and government.

“This is unsustainable and will create even more hardship for hard pressed consumers and the business sector struggling to survive in the recessionary environment created in part by irresponsible decisions by government which amongst other consequences, has led to South Africa being downgraded to junk status,” said Thomas Schaefer, newly elected President of the Nelson Mandela Bay Business Chamber.

South Africa used to have one of the lowest electricity rates in the world - it has now positioned itself as having among the most expensive rates in the world. Electricity prices in South Africa have almost quadrupled since 2007.

“High electricity costs add to the many disadvantages that South African businesses face when competing globally due to its geographic location. This is also a key factor when potential investors evaluate countries to invest in, and South Africa through unreasonable actions by an entity like Eskom, is fast becoming less and less of a desirable location for investment,” said Schaefer.

Business needs to be efficient and competitive to survive in the long-term and fundamental to achieving this, is the provision of reliable and cost effective services to businesses and their supply chains.

“The Nelson Mandela Bay Business Chamber will now review the judgement in detail and in consultation with the other applicants will in all likelihood appeal this decision. This would mean that the Constitutional Court, being the highest court in the land, will have to make a final decision which will hopefully be in favour of the people of this country,” concluded Schaefer.

The Chamber and business, through challenging these irregular steps and over-reaching actions on the part of Eskom and the regulator, have achieved significant successes in the past. By opposing these exorbitant price increases the Business Chamber was successful in restricting tariff increases in the 2017/18 tariff year to 2.2%.There was also increased willingness on the part of the regulator in terms of its obligations to adhere to its policies and procedure.

Despite the fact that Eskom has substantially increased its revenue over the past few years, quality and reliability of supply has deteriorated severely, negatively impacting upon business.