Business Unity SA (BUSA) says it believes that the average tariff hike requested by Eskom could be lower – at least as low as 10.8% instead of 16% – and still be cost-reflective.
BUSA said in a statement released yesterday that a research it commissioned has showed that “an accelerative price path, at a lower rate, can be achieved without negatively impacting on supply security”.
BUSA said it has made a detailed submission to the National Energy Regulator of South Africa (NERSA) last week essentially proposing a lower tariff hike.
“These electricity price shocks now have significant adverse economy-wide impacts. BUSA therefore sees the NERSA consultative process as an essential step in arriving at the right decisions about future electricity tariffs,” said the BUSA statement.
BUSA added that “A number of key sectors in the SA economy – such as mining, minerals, and chemicals – are heavily reliant on electricity as an input into their production processes. These sectors often are highly trade-exposed and would seem to have limited ability to absorb the substantial increases in real electricity tariff. As a result, the proposed electricity tariff increases can be expected to adversely impact these sectors’ output, employment and investment decisions”.
“This will have ripple effects throughout the economy due to the significance of these sectors. Other less electricity-intensive sectors can also be expected to be adversely impacted through the so called “second round” effects of the proposed electricity tariff hikes due reduced consumption on pass-on of increased electricity costs”.