Agri Western Cape took note that the National Energy Regulator of South Africa (NERSA) apparently did not follow the correct procedure with regard to the decision on Eskom’s power tariffs. If procedures cannot be followed, Agri Western Cape can rightly question the correctness of physical calculations and what insurance all consumers, including agriculture, have in this regard.

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Electricity is crucial for the agricultural sector, either for direct utilisation in the cold chain or indirectly, such as for irrigation. To save Eskom and to make sense of NERSA’s involvement seems to be almost impossible.

Effectiveness of NERSA’s oversight role

During public hearings in February, Agri Western Cape referred extensively to the ambiguities with regard to the extent and composition of arrears income to which Eskom would be entitled.

Agri Western Cape specifically called for more comprehensive explanations of arrears amounts and requested more clarity on the scheduling of recoveries, more specifically the impact on future tariffs. The effectiveness of NERSA’s oversight role was questioned based on obvious oversights and specific Eskom contracts that were not checked.

Concern regarding future tariff increases

Electricity costs account for up to 20% of the variable cost of farms in the Western Cape. This is why the financial survival of producers is at the forefront when Agri Western Cape is seriously concerned about future tariff increases of up to 15%, as is currently being speculated.

Agri Western Cape expects that every effort will be made to curb the increase. For all practical purposes, Eskom is no longer a going concern and will have to seek rescue at all levels, whether cost adjustments or structural shifts that may include privatisation.

The fact that arrears amounts can be registered for recovery by Eskom holds no incentive to improve efficiency. In the interests of farmers and in the interests of the country, Agri Western Cape urges that firm and transparent decisions to deal with the unbearable situation be taken soon. – Press release, Agri Western Cape