Organised Agriculture has warned electricity tariff hikes will add further pressure to on-farm profit margins and threaten food security. This comes after Eskom announced its intentions of another hike to accommodate increased budgets for the construction of two new power stations in Limpopo and Mpumalanga.
Eskom’s communications head Fani Zulu was unwilling to divulge the percentage increase, as internal discussions haven’t been finalised. But he admitted it would be substantial, due to the global financial crisis which had made it more expensive to borrow money. This, in turn, had made maintenance and the establishment of new energy resources expensive. The budget for the construction of the Medupi power station in Lephalale, for example, had to be adjusted from R70 billion in 2007 to R100 billion this year. Agri SA natural resources director Nic Opperman stressed that last year’s 27,5% tariff hike cost the agricultural sector some R300 million a year. A similar hike would cost the industry, already struggling to buffer the impact of other high inputs, an additional R300 million.
“The green initiative with a levy of 2c/KWh, to reduce reliance on carbon-based energy, already hangs like a sword over the sector,” said Opperman. “It could increase energy prices by an additional 6% to 10%.” He added Agri SA had appealed to finance minister Trevor Manuel in mid-2008, but hadn’t received feedback.
Meanwhile, Zulu tried to soften the blow by saying the hike would most probably only come into effect later in the year as the application still needed to be submitted to the National Energy Regulator and for public consultation, which could take up to three months. He added there would also be leeway to apply for discounts. Opperman said agriculture would obviously try to negotiate lower prices by trying to illustrate the industry’s importance as a job creator. “However, up to now, this hasn’t been successful,” he said. – Glenneis Erasmus
