Proposed electricity cost hike comes as another shock for agriculture

Agri SA President Johannes M³ller has reacted sharply to EskomÆs proposed electricity tariff increase submitted to Nersa for consideration. M³ller said cost hikes of this nature were now being announced at regular intervals. According to him the agricultural sector had been confronted over the past few years with drastic price increases in terms of intermediate inputs, such as fertiliser and fuel, and it appears that electricity will now assume this role. It is inconceivable that food security can be sustained amid such a cost dispensation, especially as a significant part of production takes place under irrigation and is therefore electricity intensive.
Says M³ller: ôAfter an increase of 31,3% in electricity tariffs in July this year, a further increase of 45% amounts to virtually double the cost of annual electricity use. This implies an additional cost, given national electricity consumption by agriculture of approximately R900 million. The increase, as requested, will in own right imply a cost increase of more than R600 million.ö
Agri SA will consult with its commodity affiliates, among others, regarding the impact of the proposed increase on the respective commodities. This information will be submitted, individually and collectively, to Nersa during the consultation processes planned for this purpose.
M³ller said the negative impact of this increase would certainly influence the economy as a whole. ôI hope that the government and Nersa will familiarise themselves fully with the impact of such an increase on production, job creation and economic growth.ö
In closing, M³ller said the government, as sole shareholder of Eskom, had an obligation to explain to the public in clear terms the obvious shortcomings in the management of Eskom and also to make every effort to temper the drastic price proposals. ôIt is of utmost importance that we now look at all strategic options for generating electricity, also with a view to environmental considerations and pollution, issues which, worldwide, are becoming increasingly prominent,ö he added.

Agri SA President Johannes M³ller has reacted sharply to EskomÆs proposed electricity tariff increase submitted to Nersa for consideration. M³ller said cost hikes of this nature were now being announced at regular intervals. According to him the agricultural sector had been confronted over the past few years with drastic price increases in terms of intermediate inputs, such as fertiliser and fuel, and it appears that electricity will now assume this role. It is inconceivable that food security can be sustained amid such a cost dispensation, especially as a significant part of production takes place under irrigation and is therefore electricity intensive.

Says M³ller: ôAfter an increase of 31,3% in electricity tariffs in July this year, a further increase of 45% amounts to virtually double the cost of annual electricity use. This implies an additional cost, given national electricity consumption by agriculture of approximately R900 million. The increase, as requested, will in own right imply a cost increase of more than R600 million.ö

Agri SA will consult with its commodity affiliates, among others, regarding the impact of the proposed increase on the respective commodities. This information will be submitted, individually and collectively, to Nersa during the consultation processes planned for this purpose.

M³ller said the negative impact of this increase would certainly influence the economy as a whole. ôI hope that the government and Nersa will familiarise themselves fully with the impact of such an increase on production, job creation and economic growth.ö

In closing, M³ller said the government, as sole shareholder of Eskom, had an obligation to explain to the public in clear terms the obvious shortcomings in the management of Eskom and also to make every effort to temper the drastic price proposals. ôIt is of utmost importance that we now look at all strategic options for generating electricity, also with a view to environmental considerations and pollution, issues which, worldwide, are becoming increasingly prominent,ö he added.