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Agriculture will not survive 20.5% Eskom increase!

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“It is unacceptable that Eskom’s losses caused by corruption are recovered from paying customers,” said Francois Wilken, President of Free State Agriculture (FSA). The organization’s response follows ESKOM’s request to NERSA to increase electricity costs by 20.5% from 1 April 2022.

Wilken referred to the losses of, among others, the Medupi and Kusile power stations, coal contracts, as well as the R37 billion that municipalities owe. “ESKOM is pushing to ensure that electricity prices can be implemented by 1 April 2022. They therefore want to submit the National Energy Regulator of South Africa’s (NERSA) approved tariff to Parliament before 15 March 2022.”

Dr Jack Armour, Commercial Manager of FSA, points out that ESKOM’s application to NERSA contains three separate documents applying for price increases in power generation, transmission and distribution. “The unbundling that President Ramaphosa referred to in the SONA is therefore continuing.”

Armour believes that the competition for Eskom for generation will still be tough, despite the R131 billion injection that was promised to South Africa during COP-26 to help bring about a transition to green power. “The public cannot be responsible for funding ESKOM to expand its own alternative power generation capacities in competition with the private sector.”

Free State Agriculture makes annual submissions to NERSA to oppose ESKOM’s proposals for drastic price increases. NERSA annually requests FSA to provide econometric and macro-economic analyses on the price elasticity of agricultural commodities’ input costs against power price increases, as well as the threshold price of ESKOM at which farmers will switch to alternative energy options. “However, there are analyses that depend on many factors at play in agricultural production and FSA has pointed out to NERSA that they will have to fund such a studies themselves,” says Armour.

Free State Agriculture will make a written submission to NERSA by the deadline of 14 January 2022. The organisation will also make an official submission to NERSA during the public hearings to oppose the meaningless proposals.

“Agriculture will not survive the ESKOM increases, if approved, along with all the other rising input costs!” Wilken believes.