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Government must now rein Eskom in
29 September 2009
Unless government acts decisively to rein in Eskom's flagrant abuse of consumers, it runs the risk of breaking one of its most important promises to the electorate: universal access to electricity at an affordable price.
Responding to Eskom's plan to request a further 60% increase in electricity prices, the National Consumer Forum, an independent consumer rights NGO, said it appears that Eskom is now unconstrained in its ability to hike prices.
"Eskom has realised that consumers lack any real power to resist these increases, and also that government is not going to step forward and protect consumers as it should," said NCF chairman Thami Bolani.
"It seems that Eskom has succeeded in convincing everyone in authority that there is no alternative to expensive electricity - despite the devastating impact on middle-to-lower income consumers, on inflation, on economic development, and ultimately on election promises too," said Bolani. "And government has allowed this without any serious, independent investigation of whether Eskom, as an organisation, is efficient and effective."
He said that the salaries at top management levels continued to rise and bonuses were still being paid, despite the parastatal's shocking financial performance.
"South African consumers have lost confidence in the utility," he said. "Isn't that enough of a reason for government to be insisting on more transparency, better controls and accountable management?"
Bolani was concerned about the failure of the National Energy Regulator of South Africa (Nersa) to stand up to Eskom's unreasonable demands. "If Nersa cannot provide some balance in this struggle between an all-powerful parastatal and ordinary consumers, then perhaps government should be rethinking the role of a regulator," he said.
Eskom's price hike was only part of the problem that consumers have to face, according to the NCF. Municipalities add a "profit margin" onto the Eskom price before the electricity reaches consumer households - in some cases doubling Eskom's price.
The effect has been that electricity prices for South African consumers are now more expensive than the price paid in a number of US states, according to economist Mike Schussler.
National Consumer Forum
www.ncf.org.za
ncf@sabs.co.za
012 428 7071
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