Staff Reporter
Farmers in the Free State are crying foul after South Africa’s energy regulator granted Eskom permission to increase power tariffs by 6.5 percent.
Free State Agriculture (FSA), the provincial commercial farmers’ body representing about 4 000 members, says the hike will have a serious impact on their operations.
Eskom had approached NERSA for permission to increase tariffs by about 15 percent in order to recover a R27.3 billion loss from the 2018/19 financial year.
However, the energy regulator only allowed the national power supplier to increase tariffs by 6.5 percent and recover at least R13.3 billion from consumers.
In a statement released this Wednesday, FSA said it was shocked that despite disapproval by players from different economic sectors during public hearings, NERSA has allowed Eskom to increase its charges to consumers.
Electricity is a major input cost component of most intensive food production systems such as dairy, piggery, poultry and irrigation agriculture.
FSA said given that irrigation alone makes up 25 percent of the South Africa’s foods production, such an increase was simply too high.
“It is with great disappointment to FSA that NERSA has allowed Eskom to claw back R13.3 billion from paying consumers,” FSA president Francois Wilken said in the statement.
“FSA has been making representations to the NERSA public hearings for a number of years now making our disapproval of hiking tariffs above inflation to claim back losses incurred due to poor management and blatant corruption now exposed.”
The farmers’ body said electricity was a major input cost component of most intensive food production systems such as dairy, piggery, poultry and irrigation agriculture.
It said given that irrigation alone makes up 25 percent of the South Africa’s foods production, such an increase was simply too high.
“In the agricultural sector this price increase does eventually put pressure on consumer prices for food, but initially is absorbed by the farmer who is a price taker,” Wilken said.
He said Eskom is owed a lot of money by municipalities — who purchase bulk electricity for re-distribution — and the problem has remained unresolved for a very long time.
According to Wilken, after municipal re-distributors the agricultural sector is Eskom’s second biggest client in the Free State.
He lamented yet another state bailout to the national power utility saying this would result in taxpayers having to fork out more money on top of the higher tariffs.
“Both increasing tariffs and the cost of bailout comes down to the productive tax-paying citizen being squeezed increasingly more to fund an inefficient, bloated and corrupt bureaucratic system,” Wilken said.
“How long can this go on for before the system collapses?”
NERSA has however acknowledged government failures and promised further adjustments subject to the outcome of investigations into some of the failures.
FSA says alternative renewable energy sources have long been cost-effective but the bureaucratic red tape in applying and costs of connection to the grid continue to hamper this alternative to bring more affordable food to the country.