Cosatu submits section 77 Notice objecting to the increase in the electricity tariff

In November 2009 Eskom applied to the National Electricity Regulator of South Africa (Nersa) for a 35% electricity tariff increase for the three years ending 2013.

Cosatu noted that the regulator subsequently approved tariff increases of 24.8%, 25.8% and 25.9% for 2010/2011, 2011/2012 and 2012/13 respectively.

This translates into an average increase of 25.5% a year for the multi-year price determination 2 (MYPD2) period.

Ultimately, by the end of MYPD2, electricity tariffs will have increased by a massive 76.5%.

Our demands on government

The government, as Eskom’s shareholder, must play a meaningful role in relation to Eskom’s capital expansion programme. The funding for capital expenditure must come from the fiscus.

We appreciate that the government is facing declining revenue due to the economic crisis.

It will be important to get the macro-economic policy right in order to find additional resources to fund the country’s developmental programme.

In this regard, government must consider, among other things, the following measures to ensure additional resources to fund Eskom’s capital expansion programme and broad economic development:

• a tax on short-term capital flows;

• a tax on luxury and non-essential imports;

• the creation of special government bonds for workers’ retirement and pension funds to invest;

• a special, once-off tax on corporations and individuals that can afford to pay it; and

• a once-off wealth tax.

We further demand a discussion on electricity pricing policy with the view to reviewing all provisions, including cost-reflectivity that hurt the poor.

Lastly, we demand that government stops trying to privatise the distribution and generation of electricity.

We call on the government not to allow any political party to invest in energy generation and distribution, as this would lead to a conflict of interest.

Our demands on Eskom

Eskom must;
• open up long-term electricity supply contracts with intensive energy users for public scrutiny;

• engage meaningfully and urgently with all key stakeholders to find a sustainable funding model for its capital expansion programme;

• end the excessive use of consultants that drain resources that could be use for the capital expansion programme;

• fight against corruption at all levels, in particular at senior management level, which if unchecked can drain resources needed for capital expansion; and

• review all the contracts signed with big corporations and ensure that no company is given an unfair advantage

Signed on behalf of Cosatu by:
Zwelinzima Vavi General Secretary


Numsa News No 2 2010