Farming Insurance

Free State Agriculture expresses disappointment at NERSA approval of Eskom price increases

It is with great disappointment to Free State Agriculture (FSA) that NERSA has allowed ESKOM to claw back R13,3 billion from paying consumers of the R27,3bil in losses ESKOM incurred during the 2018-19 financial year.

FSA has been making representations to the NERSA public hearings for a number of years now making our disapproval of hiking tariffs above inflation to claim back losses incurred due to poor management and blatant corruption now exposed. Electricity is a major input cost component of most intensive food production systems such as dairy, piggeries, poultry and irrigation agriculture (irrigation alone comprising 25% of the national foods production).

This increase will place an additional 6.5% increase in the costs of ESKOM electricity to the paying consumer. In the agricultural sector, this price increase does eventually put pressure on consumer prices for food but initially is absorbed by the farmer who is a price taker.

The massive debts to ESKOM incurred by non-paying municipalities do not seem to be adequately addressed by NERSA to force ESKOM to recover these debts. After Municipal Re-distributors the Agriculture Sector is ESKOM’s second-biggest client in the Free State.

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

Both increasing tariffs and the cost of bailout comes down to the productive tax-paying citizen being squeezed increasingly more to fund an inefficient, bloated and corrupt bureaucratic system. How long can this go on for before the system collapses? NERSA does, however, acknowledge Government failures and that further adjustments will 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 costs of connection to the grid hamper this alternative to bring more affordable food to the nation.

Francois Wilken

President, Free State Agriculture

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