Hiking Eskom tariffs is like rewarding inefficiency, says DMRE official – News24

Eskom word deur totale ineenstorting in die gesig gestaar, wat die land in duie sal laat stort, met gepaardgaande onluste. Foto: Gallo Images

  • DMRE deputy director-general Tseliso Maqubela said granting high tariff increases to Eskom pushed manufacturers to export their capabilities. 
  • Maqubela said businesses were likely to find markets where energy costs were cheaper.
  • While he praised the merits of plans to break Eskom down into three entities, Numsa president Andrew Chirwa dismissed this as privatisation by other means. 

SA’s economic recovery depends on affordably, reliable energy – but capitulating to ongoing applications by Eskom for tariff increases in the long term would amount to rewarding inefficiency, says the Department of Mineral Resources and Energy’s (DMRE) deputy director-general, Tseliso Maqubela. 

Maqubela was speaking on the first day of the National Union of Metalworkers of SA’s (Numsa) national bargaining conference on Monday morning. His comments come amid protracted wrangling between Eskom and the National Energy Regulator of South Africa (Nersa) over tariffs. 

Nersa approved a 9.6% tariff hike earlier this year, and is proposing an average increase of 7.47% in municipal electricity tariffs from 1 July 2022.

Maqubela told conference delegates virtually that South Africa needed to find a way to curb the escalation of tariffs to keep manufacturers in South Africa.

“The sooner these tariffs level off, the more manufacturing we can create locally. We must be of one voice that tariffs cannot increase because of inefficiency, cause then we are rewarding the wrong thing,” said Maqubela.

Maqubela said businesses were likely to find markets where energy costs were cheaper and the supply of energy was more stable and reliable if the issue were not resolved soon.

“The tax issue is one we see as if you increase tariffs, businesses will find their way around it and export manufacturing. You can’t really compete with China until you have levelled off the prices and energy,” Maqubela said.

READ | Moody’s stays downbeat on Eskom’s prospects, says upgrade in near future ‘unlikely’

The deputy DG’s remarks follow rating agency Moody’s credit rating of Eskom last week, which was kept at Caa1 – meaning it’s high-risk – with a negative outlook. The ratings agency raised concerns that the power utility’s tariff …….

Source: https://www.news24.com/fin24/economy/hiking-eskom-tariffs-is-like-rewarding-inefficiency-says-dmre-official-20220411

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