7 March 2019

South Africa: Cosatu Condemns Eskom's Tariff Hike

press release

The Congress of South African Trade Unions denounces NERSA's decision to approve an above-inflation tariff increase for Eskom to the tune of 9, 41% this year. Eskom has been given the right to increase the price of electricity by 9.41%, 8.1% and 5.2% for the next three financial years. While we welcome the rejection of the requested 17% increase by Eskom, we still feel that Eskom needs to first develop a coherent turnaround strategy and a sustainable funding model before any more money is handed over.

Workers and their families are already reeling from an increase in fuel, food and other basic necessities. South African consumers can't afford this tariff increase, and more families will be plunged deeper into debt and poverty.

This is also bad because municipalities will still add their own surcharge on top of this. It is very unfair for municipalities to fail to pay Eskom while putting a huge mark-up on top of the electricity tariff, making electricity unaffordable for many poor households.

In 2010, a decade ago, Cosatu warned against what it saw as a trend of using high electricity tariffs as the key mode of funding for Eskom. Over the last ten years, we have been giving Eskom above-inflation increases, while the wages of the workers have been stagnating.

This tariff increase will have serious consequences for the economy. Increases in the cost of living will leave consumers with less disposable income, which will put the economy further in trouble. The importance of purchasing power has been demonstrated in the relatively high economic growth rate and more job creation in the US.

Electricity is a major part of the running costs of nearly all companies and there is a real possibility that the economy will plunge into recession and many companies will start retrenching. This is catastrophic for a country that is sitting with the real unemployment of 36% and that has more than 13 million people living below the poverty line, according to Stats SA.

COSATU expects Eskom to improve drastically its revenue collection capacity and manage contracts effectively to address its financial problems. All the executives who got undue bonuses must repay the money so it can be used effectively in addressing Eskom's financial problems.

The federation repeats its call for the government to introduce radical reforms in our tax system to make resources available for infrastructure development, including the introduction of the super-rich tax. We are still angry that the government has, instead, increased VAT and left the company income tax intact.

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