Business Unity South Africa (BUSA) said on Thursday it noted “with concern” a decision by national energy regulator Nersa to grant Eskom above-inflation tariff hikes despite an underperforming economy.

“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,” said the association via an emailed statement.

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The unintended consequences of the decision could result in a further decline in Eskom’s customer base as users sought more reliable and cost-effective alternatives, said the statement.

BUSA had also cautioned against the cost of organisational inefficacies at Eskom being passed on to end-users and consumers, it said.

“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.

The association said it welcomed investigations that Nersa had undertaken to perform at the embattled power utility.

Nersa announced on Thursday that it had granted Eskom – which is R420 billion in debt – hikes of 9.41%, 8.10% and 5.22% for years 2019/20 to 2021/22 respectively.

– African News Agency

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