Eskom – 20% tariff increase?

Municipal

Michele du Plessis

“Did you know that Eskom’s tariffs have increased by about 400 % over the past decade?” Captain Gwilym Reese, Chairman Sabie Chamber of Commerce and Tourism (SCCT) said. The main thrust in his presentation to NERSA, on behalf of SCCT, was the gross mismanagement of Eskom and that they do not deserve a 20 % tariff increase until they can demonstrate open, transparent and sound management.

In a presentation to NERSA on behalf of the Sabie Chamber of Commerce and Tourism (SCCT), the following are stated: “Eskom is a State-owned enterprise and is therefore obliged to demonstrate good governance. There is a doubt that any fund generated for “Operations” will, in fact, be used for that purpose and not to line corrupt pockets. There is significantly diminished trust in Eskom. If Eskom is granted the increase (one-year tariff application from April 2018 to March 2019) and this is projected over the next few decades, electricity prices will increase at an exponential rate that the poor cannot afford.”

Eskom overview: “In 2003, they had 32,000 employees. In 2017, they have 47,000 employees (a 50% increase in employment with zero increase in productivity). One could think that maybe they employed many low paid employees to help the unemployment situation. Not so. In 2003, the 32,000 employees had an average annual salary of R200, 000. In 2017, the 47,000 employees have an average annual salary of R825, 000 (if they had inflationary increases, it would have been an average income of R400, 000). So, in summary, over the 14 year period, their production remained flat, their employment increased by 50% and their average annual salary quadrupled.” Andrew Lapping said at an Allan Gray presentation, attended by Captain Gwilym Reese.

“Eskom plans to create about 10 000 temporary and permanent jobs in the Mpumalanga Province over the next three years as part of its development initiative,” An Eskom press release stated.

Eskom has shared an honest representation of their business and what would be required to remain on a firm operational footing. “The fulfilment of these requirements will enable us to deliver on our primary mandate of providing electricity in an efficient and sustainable manner while we continue to play an important role in sustaining the economy of South Africa.”

Eskom Interim Group Chief Executive Sean Maritz said that the company’s Executive Committee has resolved to take bold action in order to shift the organisation’s reputation towards positive change.

“In so doing, we have adopted a five-path plan to rebuild a robust governance process and preserve our core value of integrity. This includes strengthening our general internal ethics and fraud framework where we have reviewed and approved our ethics and fraud management policy. This includes providing safe avenues for staff to blow the whistle on governance irregularities and crime. We are making enhancements to our declaration of interest policy, systems and processes, focusing on consequence management.”

“Despite all the governance setbacks, we need to be reminded that this is a revenue application, and decisions made by NERSA are decisions that will impact the sustainability of Eskom and the ability to provide reliable electricity. I have full faith that NERSA will make the right decision for this country. I equally assure you that Eskom will move towards a successful future and free of corruption,” Maritz concluded.

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