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Load shedding News – DA reacts to 60 percent tariff hike proposal

25 March 2008

The Democratic Alliance last Wednesday renewed its call for an independent inquiry into Eskom, in the wake of the announcement of Eskom’s call for a 60% nominal tariff hike last week.

“The DA shares the public’s outrage over revelations that Eskom has requested a 60 percent hike in electricity tariffs,” the party’s public enterprises spokesperson Manie van Dyk said.

“Industry and the greater public, already struggling with rising fuel and food prices amid mounting inflation, are now faced with the possibility of this massive hike in electricity prices.”

“It is seven times higher than inflation and will put upward pressure on both inflation and interest rates.”

Eskom had requested the National Energy Regulator of South Africa (NERSA) to approve a nominal 60 percent hike in electricity tariffs, despite the R60 billion that Treasury was already providing

“It is evident the energy utility has no real idea of its expenditure requirements and has moved from a position of damage control in managing the crisis to surprise control; certainly, it is clear that tariff increases are not a permanent solution to the crisis”

Van Dyk said that an independent commission of inquiry should be able to determine how Eskom could have got its estimates so wrong.

He said the probe should also look at Eskom’s management of the real crisis, its current production capacity, and future supply.

The DA had made a similar call earlier this month, he said.

Van Dyk said it was abundantly clear that tariff increases were not a permanent solution to the crisis and were not enough to fund Eskom’s capital spending programme.

Government needed to revoke Eskom’s designation as the sole purchaser of electricity in order to facilitate greater involvement by independent power producers, and reduce red tape for tenders on the building of new power plants.

“Eskom must also urgently attend to the maintenance of its existing infrastructure – generators are running in excess of their capacity and 18 out of the country’s 56 generators are out of order.”

“Taking these facts into account, it is not unfeasible to predict a total blackout if something is not done immediately.”

Van Dyk said the DA had devised a series of possible solutions to alleviate the current and ever-mounting crisis, some of which included clear and coherent communication on all aspects of the crisis (e.g. load shedding), with the public and industry.

In addition, electricity rationing should be considered, only after extensive consultation with industry; capacity should be increased as a matter of urgency, with the support of the treasury and, possibly, international loans.

“Government would also do well to consider greater provision for private sector investment in electricity generation capacity and the possibility of buying and selling electricity on the open market.”

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