Azra Hoosen | ah@radioislam.co.za
12 December 2024 | 11:30 CAT
2 min read

South Africans are facing the prospect of a 40% electricity tariff increase as Eskom seeks approval from the National Energy Regulator of South Africa (NERSA) to address its financial shortfalls and inefficiencies. The proposed hike comes as municipalities across the country struggle to pay their mounting debts to the state-owned power utility.

Cash-strapped consumers, already grappling with rising costs, are bearing the brunt of Eskom’s financial crisis. Amid growing public discontent, local communities nationwide have strongly rejected the proposed increase during recent public hearings that concluded in KwaZulu-Natal over the weekend.

Mayor Chris Pappas of uMngeni Municipality, a vocal opponent of the tariff hike, told Radio Islam that Eskom’s explanation for the 40% tariff hike was not coherent. He explained that while Eskom presented figures showing how generation had stabilised, more units had come online, and expenditure on diesel had decreased; their numbers simply did not add up. “Eskom is generating far less electricity than they were 2 years ago, largely because of independents that have come online. So the graphs that you’re showing us were inverse. They were nonsensical. You have an increase in cost but a decrease in production. These costs are then put on to consumers,” said Pappas.

He pointed out that if production is lower and people are consuming less, the costs should logically be reduced for consumers, not increased. “Unless, of course, and this is what our argument is, that Eskom continues to pass on the costs of the inefficiencies and years of corruption and maladministration onto consumers, which is not fair in the premise of our argument,” he added.

Eskom has applied for significant increases through 2027, including 36.15% in 2025, 11.91% in 2026, and 9.1% in 2027, amounting to a cumulative 66% increase over the period.

Pappas acknowledged that prices inevitably increase every year, sometimes due to Eskom’s issues or global factors like fuel costs or parts. Consumers understand these price hikes, whether in supermarkets or for electricity. However, he argued that a 40% increase is unjustifiable, especially when there were already significant hikes of 18% and 13% in the previous years.

He noted that while NERSA has previously protected consumers by reducing Eskom’s massive tariff hike requests, it raises a key question: When will NERSA focus on regulating charges to benefit consumers rather than merely keeping Eskom afloat? “I think that’s the argument that has led to many of the developments that we’ve seen in the energy sector in South Africa, whether it is the declining price of solar, whether it is the ability of municipalities now to buy directly from independent power producers, the opening up of bid windows, etcetera. But what we can’t do is let all of this power take some time to come online. Projections are around 2026. We’ll start to see all these decisions that the national government has taken around electricity really come to fruition. But in that period, we can’t let Eskom get away with this type of increase. And that’s why I think you’ve seen such a huge outcry and a huge outpour in terms of public participation across the whole country. And we need to keep that up.” he said.

“We shut down NERSA’s first meeting,” Pappas told Radio Islam, adding that Political parties, civil society, and the public joined forces, refusing to accept it as a mere “tick-box exercise”.

“We want to meaningfully participate, to be heard, and receive answers to our valid concerns, most of which Eskom has not been able to provide,” he asserted.

Pappas highlighted that while no one likes increases, people are more understanding if they’re tied to general trends, like inflation. For instance, if inflation is 4%, people expect a corresponding rise in prices, including groceries or other essentials. However, arbitrary or excessive hikes are much harder to justify. “While it’s not welcomed, people understand it. So there has to be an inflationary linked increase, if there’s any increase at all. But the other thing that we have to consider is what are we actually funding?” he questioned.

According to Pappas, Eskom is not building new power plants, so there is no significant capital funding being spent. He suggests that with reduced production, staffing costs should also decrease. As the entity is being split, generation overheads aren’t as high as before. Pappas believes that consumers might accept, though not happily, an inflation-linked increase, but the current hikes are far beyond that.

LISTEN to the full interview with Ml Sulaimaan Ravat and Chris Pappas, the Mayor of uMngeni Municipality, here.