Ramaphosa on electricity price hikes in South Africa

 ·30 Jan 2023

President Cyril Ramaphosa says the government is considering additional mechanisms to deal with the rising cost of electricity in light of the recent 18.65% electricity tariff increase granted by the National Energy Regulator of South Africa (Nersa) that is set to add pressure to already cash-strapped South Africans.

Last week Ramaphosa pleaded with the energy regulator to defer the price hike by altering the time period of increases in tariffs.

However, writing in his weekly letter to the public this Monday (30 January), the president said that it is important to affirm the independence of the body and the legal process it fulfils in setting tariffs.

He said that tariffs that reflect the cost of producing electricity are necessary for Eskom’s financial sustainability and for the power utility to be able to service its debt and take on critical maintenance that is much needed to end load shedding.

Despite this, he added that there is little doubt that increasing the price of electricity right now will add difficulty to South African’s day-to-day lives.

“Rising food and energy prices are fuelling a cost of living crisis around the world, and the poor are being hardest hit. In South Africa, food prices have increased on average by 12% over the past year,” said Ramaphosa.

“This is the problem we face: we have to ensure that Eskom has the resources it needs to resolve the electricity crisis while protecting South Africans from the effects of higher prices.”

There is no simple answer to the problem, the president said.

In light of the energy crisis, Ramaphosa said that the government is looking into mitigation strategies, including:

  • Helping households and small businesses install solar power and energy-saving devices
  • Support households with rechargeable lights
  • Work with learners to catch up where load shedding interrupts lessons

In terms of solar, Ramaphosa recently stated that work is being done on creating a system where household excess electricity can be sold back into the national power grid.

Big changes coming for rooftop solar in South Africa: Ramaphosa

Ramaphosa said that the government would continue implementing older policies to mitigate the hardships faced. He said that the current free basic electricity allowance – if implemented properly by municipalities – should shield the poorest households from the tariff increase.

On top of the electricity allowance, Ramaphosa spoke of alternatives that would be in play to reduce further expenses, such as the social grant, zero-rating of basic food products as well as exempting certain poor families from paying school fees.

The president called on all relevant stakeholders, including the government, Eskom itself, business labour and communities, to look for long-term solutions to the energy crisis and work together.

“We should be wary of short-term solutions that we will regret in the years to come,” added Ramaphosa.

South Africa is currently facing unprecedented rolling blackouts, disrupting business operations and inconveniencing millions of people.

On 29 January, the failing national power utility said that it would implement all-day stage 4 load shedding for the coming week until further notice; this is after a short stint at stage 2 that came to a halt after generating units at multiple power stations collapsed.

Nersa approved the 18.65% increase for 2023 and a 12.74% hike for 2024 on 12 January. The increase was lower than what Eskom applied for (32%); however still significant enough to have a sizeable knock-on effect on all consumers.

Nersa acknowledge the economic situation the country faces; however, it was seen to be a necessary evil, with the regulator for electricity, Nhlanhla Gumede stating that the authority was stuck between a rock and a hard place.

Read: All-day stage 4 load shedding this week – check your schedule

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