DURBAN - With Eskom asking for 3 x 15% annual increases for the next three years, compounded this works out to an extra 50% at current prices.
Bear in mind since load shedding, Eskom has had massive increases all these years. In fact, I wonder if those aluminium “smelter agreements” with heavily subsidised electricity are still in place and does Eskom have any loss making customers/agreements.
In many instances the Eskom rate is a base rate. Add to this the “mark- ups” by municipalities and pre-paid vendors, electricity is going to be a luxury. Many would be paying double the Eskom rate for power in three years’ time. Ask a supermarket or factory owner what this means.
With inflation at 6%, your increases will add up to 19% as opposed to Eskoms 50% .
An extra 30%!
On this basis Eskom is in serious and dire trouble.
To think Zuma wanted to add even more cash flow burdens with the nuclear deal; where would this have left South Africa?
Anyone would love to own a business where selling current and existing stock, chopping your large bill you can get an extra 50% more turnover with costs rising only 19%.
These increases could have been justified in a high inflationary environment but with South Africa’s inflation at 6% and many businesses unable to pass on such increases; Eskom is really going to create havoc and distress among many households and businesses.