Johannesburg - Eskom's proposed 16 percent tariff increase will wipe out 37 percent of small- and medium-sized companies, the National Union of Metalworkers of SA said on Wednesday.
“This electricity tariff increase will spell disaster,” the union's general secretary Irvin Jim told reporters in Johannesburg.
“This huge electricity tariff will basically destroy the small manufacturing capacity we have.”
Jim said seven foundries had already been closed, which had meant a loss of jobs.
If Eskom was granted the 16 percent increase it would destroy even more jobs.
Jim was talking on the sidelines of a meeting between business and unions regarding Eskom's proposed tariff increase.
The Steel and Engineering Industries Federation of SA's Hank Langenhoven agreed with Jim.
“The increases will have such an impact, and could be fatal,” he said.
“There are quite a number of smaller companies on the brink of closing down.”
Langenhoven said funding needed to come from somewhere. But the Eskom tariff increase would be fatal for the sector.
National Association of Automobile Manufacturers of SA director Nico Vermeulen, said the increase would reduce South Africa's future economic growth.
“Tariff increases should be restricted to CPI and anything over and above should be funded by long-term debt,” he said.
“Long-term debt financing through bonds is already well established in South Africa. Transnet is an example.”
Eskom needed to go to the market and issue bonds, which would introduce a high level of discipline at the parastatal. - Sapa