Eskom should flip the switch on electricity costs. [Picture: via Tekled.co.uk]
An energy expert says South Africa’s power utility, Eskom, can avoid exorbitant tariff hikes if it prioritises cost-cutting measures. This is one way to ensure affordability for South Africans, whose pockets are squeezed ever so tightly.
Speaking in an interview with Salaamedia on Wednesday, energy expert Chris Yelland, managing director at EE Business Intelligence, said Eskom could achieve cost-reflective tariffs without a price surge.
A 36% price hike is on the cards for 2025, should the power producer get its way. Research suggests prices are already a whopping 75% higher than necessary.
“The cost reflective tariffs can of course be obtained by putting up the price, but they can also be obtained by cutting the costs. There is a lot of fat in the system and they really need to downsize their business in terms of the number of staff, in terms of their operations,” Yelland said.
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Flip the switch
With the South African Human Rights Commission (SAHRC) warning that the proposed price hike could light a fire of social unrest, Eskom is being urged to flip the switch on costs.
However, “the way Eskom looks at things, they don’t even think about cutting costs. They only consider putting up the prices to achieve cost reflectivity. The reality is that it needs to be a combination of both.”
Apart from reducing operational costs, the way forward, suggested Yelland, is to “diversify sources of electricity so that there is a competitive environment”. It is also necessary to put an end to the skulduggery plaguing the entity.
“Yes, there have been some mid- and low-level prosecutions but the big fish are still swimming out there. That’s a failure that goes beyond Eskom. No doubt about it, there has been a huge amount of inefficiency, maladministration, corruption and costs that have occurred at Eskom that need to be brought under control,” he said.
