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Comment on Finance Minister’s 14-point action plan

Prince

COMMENT: Comment on behalf of Nelson Mandela Bay Business Chamber Acting CEO Prince Matonsi

We welcome the announcement by Minister Gigaba to recapitalized state-owned entities, the reduction of government guarantees granted to SOEs, broader state-owned entity reforms, private sector participation framework and costing development mandates for SOEs (points 4 to 7).

This is in line with what business has been calling for, for a number of years. Non-performance and mismanagement by parastatals should not have been tolerated for so long, as it has had a detrimental effect on our economy.

The proposed reforms and suggested public/private partnerships would be better positioned to fix the inefficiencies currently plaguing these entities. Whether these action points are enough to deliver the desired outcome of substantially growing the economy of South Africa remains to be seen. What cannot be tolerated any more, however, is the burden of ineffective SOEs.

The Nelson Mandela Bay Business Chamber is concerned by point 8 (Energy) of Gigaba’s 14-point plan regarding the implications of the “soft support until tariff adjustment in 2018” to Eskom and how this could impact on next year’s tariff increase. While details of the exact nature of this “soft support” must this still be made public, we as taxpayers cannot be expected to pay more to subsidise Eskom via the fiscus.

As a business fraternity we will continue to challenge unreasonable electricity tariff increases, in the interest of businesses’ sustainability. We cannot accept the possibility of major electricity tariff increases of up to 28% next year. This is unsustainable and will create even more hardship for hard pressed consumers and the business sector struggling to survive in the recessionary environment.

This situation will be disastrous for the country and particularly for Bay businesses that depend on competitive electricity pricing. It could threaten the existence of many businesses and add significantly to the already high unemployment numbers. As such, we are currently a co-applicant in the legal process (application for Leave to Appeal in the Constitutional Court, following an appeal of the National Energy Regulator of South Africa and Eskom against business in Nelson Mandela Bay) that is being led by the High Energy Users group.

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