As a participant in the Nelson Mandela Bay Municipality’s 2026/27 electricity tariff consultation process, the Business Chamber analysed the proposed 11% average increase and submitted our formal response in this regard.
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. 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 remain 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.
The Chamber is very concerned about the proposed double digit increase in electricity tariffs which comes at a time when local businesses are facing many headwinds, among which includes massive 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 1040%, 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, has eroded the competitiveness of local manufacturing against cheap imports which are flooding our market and displacing locally assembled products. These imports come from markets which are highly competitive, have excess capacity in place, benefit from government subsidies, and with lower electricity and other input costs
Moreover rising electricity costs affect the general sustainability of small, medium and large businesses across all sectors of our local economy which further threaten 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 sub-stations.
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.
Furthermore, the metro faces a very serious infrastructure management crisis caused by the lack of adequate and routine maintenance over many years, which has severe consequences on the lives of communities and the local economy as a whole. Electricity supply failures are rising in severity, with repeated pylon collapses and businesses being subjected to protracted power outages for days, sometimes weeks, on end, in just the first few months of this year.
Such unplanned power outages and dips have intensified and now represent a high risk to our local economy. Since January 2023, the Chamber has recorded 202 unplanned outages across key industrial and commercial areas, an untenable reality which has a direct bearing on the ongoing viability of businesses and their ability to sustain much needed jobs, in a metro which has an unacceptably high official unemployment rate of 29.8%.
Issued by Denise van Huyssteen, the Chief Executive Officer of the Nelson Mandela Bay Business Chamber.
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