Zara Nicholson
Experts have warned that industries would not survive the proposed hikes in electricity tariffs over the next few years and they would be “devastating and disruptive” to economic growth.
Today households will be paying almost 20 percent more for electricity, the third major increase imposed by Eskom since 2008.
To maintain and build power stations, Eskom has been allowed to increase tariffs by 25 percent each year until 2014 and possibly 2016.
This means that by the end of 2014, the price of electricity will have increased by 400 percent over six years, the Cape Chamber of Commerce has said. This would “devastate the economy”.
Economist Dawie Roodt agreed, saying the rise would lead to “huge increases” in almost all goods and services.
In a statement, chamber president Michael Bagraim said: “I don’t think any industry could get away with tariff increases of 400 percent in six years and survive.”
Two years ago the selling price for electricity was 24.4 cents a unit. It will be just over 50 cents this year.
“When the proposed increases are added to those already approved, the average price would be nearly R1 a unit in 2014,” Bagraim said.
Peter Haylett, chairman of the Chamber’s Industrial Focus Portfolio Committee, said present and planned increases would make Eskom electricity more expensive than some forms of alternative energy.
“Some companies are planning to generate their own electricity using solar and wind power and we can expect to see this trend grow,” Haylett said.
“These high electricity costs will also make it more difficult for manufacturers to compete with imported products and exporters will find that their ability to compete in the global markets is being eroded.”
Roodt said
the increase in electricity was likely to push up inflation and interest rates.
“This is going to be extremely painful and will disrupt the economy.”
zara.nicholson@inl.co.za