South Africans can’t afford to pay 15% more for Eskom’s mismanagement and corruption

 ·31 Aug 2018
Eskom broken

The DA has rejected Eskom’s bid to hike tariffs by 15% for the next three years, saying that South Africans are already struggling to make ends meet – and paying for Eskom’s inefficiency and blatant corruption is unfair.

It was revealed this week that Eskom was seeking to hike rates by 15% each year over the next three years in a bid to boost revenue and pay off its debts. The power utility is expected to make a formal request to the energy regulator, Nersa, in the coming days.

However, this plan has been met with wide criticism from civil groups and opposition parties, who say that Eskom must find other ways to solve its revenue issues.

Civil action group, The Organisation Undoing Tax Abuse (Outa), said that, when combined with the recently approved back payment of R33 billion through the Regulatory Clearing Account (RCA), total increases could add 20% a year to the tariffs.

“The terrible mismanagement and blatant corruption of Eskom during the Zuma years has sent Eskom into a debt spiral, with costs far outstripping revenue. Eskom is owed R13 billion by municipalities around the country,” the DA said.

Adding insult to injury, Eskom’s price hike plans come after the power utility signed off on wage increases high above inflation – including once-off R10,000 bonuses – which will add almost R4 billion to its expenditure.

This, for a bloated workforce that the group is barely committed to cutting back on.

Eskom says it has a strategy to cut 7,000 jobs – which is half of what earlier reports said it was targeting, and a quarter of what industry experts believe need to be let go to make the company financially stable.

According to the DA, the only way to keep the cost of electricity down is to introduce market competition in the generation and/or transmission of electricity – and it restated its call to privatise the group.

Eskom’s debt by March was R387 billion and is expected to be R600 billion within four years, leading to the utility considering options for managing this to avoid defaults.

“The time has come to seriously consider the restructuring and privatisation of Eskom,” the party said.

Read: Eskom could end up in a ‘Steinhoff-type situation’ – Outa

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