THE Gauteng leg of the National Energy Regulator of South Africa’s (Nersa’s) hearings will go into an unscheduled third day on Friday, to accommodate the long list of submissions from parties ranging from heavy industry to the poorest of the poor. At Thursday’s presentations Business Unity South Africa (Busa), the Chamber of Mines of South Africa, the Chemical and Allied Industries’ Association (CAIA), and new gold miner Sibanye Gold all rejected Eskom’s application for a 16% a year tariff increase over five years.
Busa deputy CEO Raymond Parsons said the decision by Nersa could be a "tipping point" for several industry sectors.
South Africa’s largest producer of steel, ArcelorMittal South Africa, said at the Nersa hearing in Cape Town last month that electricity had become an "unaffordable source of energy".
Electricity costs had nearly trebled since 2007, and were set to rise nearly six times from that base by 2017 if Eskom’s application was successful.
Laurraine Lotter, executive director of the CAIA, said the association wanted Eskom to levy a 6% increase each year, but realised 10% a year "might be required". However, she also said the CAIA believed even 10% was not affordable for the industry.
The association wanted a review of the municipal tariff system, which Ms Lotter said added arbitrary surcharges to Eskom prices. It also said, over time, all high-energy users should become direct Eskom customers.
David Mertens, electricity working group leader at the National Foundry Technology Network (NFTN), said the foundry industry would be all but extinct by 2015 should Eskom’s electricity tariff increases proceed.
Addressing Parliament’s portfolio committee on energy yesterday, Mr Mertens pointed out that most foundries were small operations employing about 30 people. These firms had to buy their electricity from municipalities and therefore faced at least a 50% mark-up compared to those who bought directly from Eskom.
"This is a discriminatory practice," he said.
The NFTN said in its presentation that municipalities were heavily dependent on the income generated from the foundries to shore up their own finances and so were reluctant to find energy- efficient savings that could reduce this money.
According to the NFTN, in 2007 there were 110 iron and steel foundries. That had fallen to 67 in 2011. Nonferrous foundries had decreased from 119 in 2007 to 70. The number of people directly employed by the foundry sector had dropped between 10% and 15%, to about 15,000.