Economist Sanele Sibiya has warned that the proposed electricity tariff increase could deepen the cost of living pressures.
He explained that higher electricity costs would likely to have a ripple effect across the economy, as businesses could pass on increased operating expenses to consumers through higher prices of goods and services. He said the cumulative impact of these increases was particularly concerning because income growth had not kept pace with the rising cost of essential goods and services, eroding household purchasing power.
“The proposed electricity tariff increases come at a time when households are already grappling with rising living costs, including recent increases in bread prices, transport fares, fuel costs and water tariffs,” said Sibiya.
He noted that although regulators had previously approved lower electricity tariff increases than those requested by the EEC, delaying cost adjustments could result in accumulated unrecovered costs and substantially higher increases in subsequent years. He said gradual and predictable annual adjustments would allow consumers and businesses to plan better and avoid sudden tariff shocks.
He warned that inflationary pressures could intensify due to global geopolitical tensions, possible increases in international oil prices and climate-related disruptions, including drought and El Niño effects, which could affect food production and push up staple food prices.
According to Sibiya, the combined increases in food, transport, water and electricity costs were likely to influence the next wage negotiations, with labour unions expected to push for higher adjustments to protect workers’ purchasing power. However, employers would also be under pressure from rising operational costs, potentially making negotiations more challenging.
He further called for increased investment in domestic electricity generation, particularly renewable energy such as solar power, to reduce the country’s dependence on imported electricity.
While acknowledging EEC’s need to recover reasonable costs, maintain infrastructure and ensure reliable supply, Sibiya said regulators needed to balance the utility’s financial sustainability with consumers’ ability to afford electricity.
He suggested gradual tariff adjustments, improved operational efficiency, targeted assistance for vulnerable households and increased local electricity generation as measures towards a more affordable and resilient energy sector.
