Nelson Mandela Bay Business Chamber warns 11% power tariff hike threatens jobs and growth

The Nelson Mandela Bay Business Chamber has warned that the municipality’s average 10.95% electricity tariff increase for the 2026/2027 financial year risks jobs, investment and economic growth.

The city’s budget was passed on Monday. The approved tariff increases include:

• an average 10.95% electricity hike;
• 6.5% more for water, sanitation and refuse; and
• property rates could also increase by 5.5%.

The increases kick in at the end of this month.

In comparison, residents in KuGompo City will see an 11.10% increase.

Nelson Mandela Bay Business Chamber CEO Denise van Huyssteen said they participated in the municipality’s electricity tariff consultation process. She said the chamber analysed the proposed 10.95% average increase and submitted a formal response.

“In our submission, we highlighted that the cost of supply study was defective and needed to be rectified and that the tariffs must be cost-reflective,” she said.

Rising electricity costs affect the general sustainability of small, medium and large businesses across all sectors of our local economy, which further threatens job sustainability

—  Denise van Huyssteen, Nelson Mandela Bay Business Chamber CEO

“This resulted in amendments to the study and reductions to the tariffs, but even with these adjustments, the average 11% increase is still not cost-reflective and remains too high for businesses and consumers to simply absorb, while at the same time there is no clear plan of action to address the inefficiencies relating to the distribution and supply of electricity as well as electricity infrastructure shortcomings.”

She said the double-digit increase comes at a time when businesses are facing many headwinds, including:

• fuel price increases;
• escalating logistics costs;
• the high volume of imports into our market; and
• the lack of maintenance of municipal infrastructure.

“The affordable cost of electricity versus other global markets used to be an advantage and key factor in attracting manufacturers to establish and expand their operations in the metro.

“However, in the last 20 years, Eskom tariffs have increased by 1,040%, compared to a CPI increase of 157%, clearly negating such benefits for our economy.

High, above-inflation increases in electricity costs over several years, coupled with the decreasing reliability of electricity supply, had eroded the competitiveness of manufacturing against cheap imports, which flooded the market and displaced assembled products, she said.

“These imports come from highly competitive markets, have excess capacity in place, benefit from government subsidies, and have lower electricity and other input costs.

It is vital that billing issues are urgently addressed and in instances where there may be residents and businesses stealing electricity, strong action and enforcement must be taken against these transgressors

—  Van Huyssteen

“Moreover, rising electricity costs affect the general sustainability of small, medium and large businesses across all sectors of our local economy, which further threatens job sustainability.

“A change in approach is therefore required that addresses the root causes of the issues with an urgent plan of action implemented to ensure that electricity losses are contained and reduced with effective electricity distribution and infrastructure management in place, along with ensuring security of supply through the monitoring and surveillance of critical assets such as substations.

“On the issue of electricity losses, it is vital that billing issues are urgently addressed and in instances where there may be residents and businesses stealing electricity, strong action and enforcement must be taken against these transgressors.”

Unplanned power outages and dips have intensified and now represent a high risk to the city’s economy, she added.

“Since January 2023, the Chamber has recorded 202 unplanned outages across key industrial and commercial areas.”

Follow The Herald WhatsApp channel today and stay connected to the stories shaping our world.

The Herald