South Africa Stung By 31% Energy Price Rise

Posted on 01. Jul, 2009 by Ross in Africa, Energy Prices, Mining & Quarrying

Today’s 5% increase in fuel prices will be the last thing on the people of South Africa’s minds as they fill up their cars to get to work and back.

The electricity prices they pay at home, as well as those that their employers face too, have been hiked by a massive 31.3% from today for the next year, despite the perilous economic climate.

State power company Eskom had originally asked for a 34% price rise from today until the end of March 2010, so is relatively pleased. but they are in a tiny minority as spokespeople from all sectors queue up to complain about the massive hikes. Thami Bolani, chairperson of the National Consumer Council, was one of the most vocal opponents:

I am convinced that if the National Energy Regulator of SA had not permitted the hike, the Reserve Bank would have cut rates by 50 basis points… We are holding a public meeting in Soweto on July 25, where we’ll be discussing responses to Eskom’s tariff hike… We cannot allow Eskom to go on raping us like this.

The Congress of SA Trade Unions (Cosatu) said the consequences of the tariff hike would be “catastrophic”; that the 31,3% hike was almost four times the current level of inflation and therefore could not be justified as a response to Eskom‘s rising running costs. Earthlife Africa Johannesburg’s energy officer Tristen Taylor said the increase would certainly hurt the poor:

What is shocking is that while poor users, small businesses and domestic customers will all be faced with increases, Eskom‘s large customers (under Special Purchasing Agreements) will not be affected. Essentially township dwellers and suburbanites will have increases but large companies are given a pass. This is taxes for the poor, and handouts for the rich.

Industry has been just as vocal. Chamber of Mines representative Dick Kruger noted that the additional energy price rise would cost South African mining firms an extra R2-million:

The challenge for the mining sector, is that we have a basket of goods and services whose costs are rising at double digit figures in an environment of low commodity prices. This means that a number of mining companies are battling for survival and extra costs add to the burden of the pressures they face in the short term.

Image of South Afirca vs Australia as the light fails by Rick212 @ Flickr