Business Unity South Africa (BUSA) notes with concern the National Energy Regulator of South Africa’s (NERSA’s) decision to grant Eskom above-inflation electricity tariff hikes against the backdrop of an economy that is underperforming.

BUSA cautions that the cumulative tariff over the next three years may undermine economic recovery efforts, as electricity is a major input cost for business. The organisation had warned during the NERSA conducted public hearings into Eskom’s multi-year price determination 4 application, that the economy would not be able to absorb above-inflation electricity increases.

The unintended consequences of today’s decision may result in a further decline in Eskom’s customer base, as users seek more reliable and cost-effective alternatives, exacerbating the depth spiral. BUSA had also cautioned against the cost of organisational inefficacies at Eskom being passed on to end-users and consumers.

“BUSA has consistently emphasised the need for any tariff adjustments to be considered on the basis of affordability, justifiability and prudence. It also needs to be assessed against any restructuring of Eskom to ensure a fit-for-purpose electricity supply industry,” said BUSA Vice-President Martin Kingston.

BUSA welcomes the further investigations that NERSA has undertaken to perform into prudency, efficiency and performance, as well as the Regulatory Asset Base.