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ANC uncomfortable with Eskom price increase proposals

Gwede Mantashe,
Secretary General,
Johannesburg, South Africa — MININGREVIEW.COM — 16 November 2009 – South Africa’s ruling African National Congress (ANC) and its partners are "uncomfortable" with power utility Eskom’s request for price increases of 45%a year for three years, says ANC Secretary General Gwede Mantashe.

Eskom has submitted an application asking for the yearly tariff rise for the next three years, or for prices to be increased by 146% in one go. Both suggestions were widely criticised by economists and industry, which said increases of that nature would stoke inflation and force industrial majors “’ including mines “’to shut parts of their operations.

Reuters reports that the government has backed Eskom’s need for higher prices, but that opposition from the alliance “’ which includes the ruling party, trade union federation COSATU and the South African Communist Party “’ may see it lower its request.

“We were uncomfortable with the 45% tariff rise over three successive years. The multi-year price determination by Eskom will negatively impact on society,” Mantashe said at a briefing after a three-day alliance summit.

Eskom will submit a final tariff rise request to the country’s power regulator by the end of this month.

The utility needs the tariff increases to raise money for its R385 billion rand power supply expansion programme, required to meet fast-rising demand in Africa’s biggest economy.

AngloGold Ashanti chief executive Mark Cutifani said last week that the government was expected to reject Eskom’s initial proposal due to the impact it would have on the gold sector.

He said the government had signaled that rates would likely double over three years, not triple as suggested by Eskom.