Free State Agriculture (FSA) is disappointed that NERSA has allowed Eskom to claw back R13,3 billion from paying consumers of the R27,3 billion in losses Eskom incurred during the 2018/19 financial year.

FSA has been making representations to the NERSA public hearings for several years now, voicing our disapproval of hiking tariffs above inflation to claim back losses incurred due to poor management and blatant corruption. Electricity is a major input cost component of most intensive food production systems such as dairies, piggeries, poultry units and irrigation agriculture (irrigation alone comprises 25% of the nation’s food production).

Price increase puts pressure on consumer prices

This increase will add an additional 6,5% to the electricity costs consumers need to pay. In the agricultural sector this price increase will eventually put pressure on consumer food prices, although it is initially absorbed by the farmer who is a price taker.

The massive debts that Eskom incurred by non-paying municipalities does not seem to be adequately addressed by NERSA. After municipal re-distributors, the agricultural sector is Eskom’s second biggest client in the Free State.

Furthermore, the state has also agreed to yet another bailout – a massive cloud of yet to be resolved corruption and political and state capture charges already hangs over this SOE.

Roadblocks to alternative renewable energy sources

Both the increase in tariffs and the cost of bailout comes down to the productive tax paying citizen being squeezed even more to fund an inefficient, bloated and corrupt bureaucratic system. How long can this go on before the system collapses? NERSA does, however, acknowledge government’ failures and that further adjustments will have to be made subject to the outcome of investigations into these failures.

Alternative renewable energy sources have long been cost effective, but the bureaucratic red tape in applying and the costs of connecting to the grid hamper this alternative, which may bring more affordable food to the nation. – Press release, Free State Agriculture