24 February 2010
ABC DISMAYED AT ELECTRICITY TARIFF INCREASES GRANTED TO ESKOM BY NERSA
“While the electricity tariff increases granted to ESKOM for the period 2010 to 2012 are down on the initial 45% and then 35% increases requested, the announced increases by NERSA nevertheless will have a very significant negative impact on the broader agro-food industry”, said Dr John Purchase, CEO of the Agricultural Business Chamber (ABC) today. “It is understandable that ESKOM required a significant increase to fund its necessary capital programme, but this needed to be balanced against the real negative economic impact.”
Given the 31% tariff increase in 2009, as well as the announced increases of 24,8% for 2010, 25,8% for 2011 and 25,9% for 2012, electricity tariffs will have increased by 2,5 times from beginning 2009 to 2012. NERSA has indicated that the inflationary effect will be less than 1,5% per year, but this figure needs to be thoroughly investigated as indications are that the effect on food inflation will be considerably higher, given the multiplier effect in agricultural value chains.
“On the back of the major fuel tax and Road Accident Fund levy increases in both the previous and recently announced budgets, the granted electricity tariff increases will have an unavoidable and major effect on food inflation. It is a real concern that so-called administered prices on a broad front are increasingly impacting negatively on the competitiveness of the various value chains in the agro-food sector”, said Dr Purchase. “It is time that government realizes that such increases will increasingly undermine food security and be to the detriment of consumers.”
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ENQUIRIES: DR J L PURCHASE, CHIEF EXECUTIVE: ABC
012 349 1315 / 082 441 2308
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