Cosatu condemns Eskom tarrif hike proposal 15-11-07

 

COSATU condemns Eskom Tariff hike proposal

The Congress of South African Trade Unions is outraged that Eskom has proposed raising its tariffs by a massive 18% for next year and a further 17% in 2009. The federation demands that the company immediately abandons its plan, and that the National Energy Regulator rejects the proposal.

The impact of such an increase would be disastrous for consumers, workers and the country as a whole.

Firstly, it would bring extreme hardship to consumers, especially the poor, who are already reeling from rocketing prices for food, petrol and other basic commodities, as well as high interest payments on bonds and loans.Many families who have struggled to get connected to electricity, will find they cannot afford to use it, and will sink back to living as they did before they were connected. Other may have to make heartbreaking decision to choose whether to keep paying for their electricity or their children's school fees.

Secondly it would inevitably lead to job losses and a slowdown in the already too slow rate of job creation, because of the increased cost of production that such a rise would inevitably cause across all sectors of the economy.

Thirdly it would inevitably have a knock-on effect on all other prices, since electricity is used in the production, distribution and sale of virtually all commodities.

Fourthly Reserve Bank governor, Tito Mboweni, who has condemned the increase, could seize on its inevitable effect on the overall rate of inflation as an excuse to raise interest rates yet again, as he has already warned that he might be forced to do, and this would impose still more misery on consumers.

The proposed increase is a perfect illustration of the dangerous consequences of privatising a parastatal organisation and insisting that it must maximise its profits, rather than provide an efficient and affordable public service.

COSATU accepts that funds are needed to invest in new capacity to meet the increased demand, and believes that this should have been done years ago. The money for investment should not however have to come out of the pockets of its poor consumers.

COSATU agrees with Tito Mboweni, who told the parliamentary finance portfolio committee, that the fight against inflation would be better served if Eskom raised the money for building infrastructure by issuing a bond and getting the money from the market. Business needs a cheap and dependable supply of power and they should therefore cough up the capital to enable Eskom to provide it.

A reliable and affordable supply of power is a necessity for the country and the economy. It must not become a luxury only available to those rich enough to afford the proposed sky-high prices.