At the end of December last year, Eskom got approval to hike its tariffs by 14.2% after the National Energy Regulator (Nersa) denied the power utility to raise tariffs by its desired 18%. Many questions have been asked to date about this hike, is it a good or bad thing? Many would say it is bad as inflation is surely going to go up as an increase in electricity prices will increases the prices of everything else.

The Central Bank of South Africa aims to keep the countries inflation between the 3% and 6% mark, but with an increase of 14.2% in electricity prices, this target surely can not be met. I recall watching the Central Bank’s governor’s last announcement when he announced the interest rate hikes, he was asked after the announcement what he thought about the potential electricity price increases and he said he hoped the increases would be in line with the Central Banks target of inflation. In other words he wanted the increase to be between 3% and 6% but now the increase is a staggering 14.2%. It could have been much worse if Eskom got permission for an 18% hike.

It is no secret, South Africa needs more electricity and for this to be achieved there needs to be greater capacity in the country to produce this electricity. The tariff increase should allow Eskom to generate more money in order for them to finance the building of more infrastructure and also to afford paying the people who will be working towards building and maintaining this new infrastructure. There is no point in building new power plants if you do not have the right people to run them. In yesterdays Sunday Times in the careers section, there was a half page advert from Eskom inviting people to apply for the various positions available at Eskom. I was shocked to see the number of vacancies available as this goes to show that Eskom currently does not have the right skills or numbers in their ranks. No wonder we are struggling with electricity in South Africa, there simply aren’t the right skills to run Eskom. Now are all these vacancies going to be filled? I do not think so as I am sure the required skills are not available in South Africa and thus Eskom will have to seek the skills from outside the country and pay these people huge salaries and these salaries will eat into the funds available for infrastructure expansion.

There is nothing more I would like to see than the electricity problems in South Africa being resolved. I just hope that Eskom has a decent plan. They have been given the green light for a 14.2% tariff hike which is at the end of the day going to ‘burn’ the consumers pocket but let us hope this pain we will feel from increased tariffs will at the end of the day benefit us.

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