Eskom tariff hike to hit tenants hard

On Thursday, the association, which represents the commercial and industrial property sector, added its voice to growing concerns about the massive increase.

Shortly after the announcement was made last week, opposition political parties, civil society and the Congress of SA Trade Unions described the increase as outrageous.

The increase is slightly less than the 34% that Eskom had originally asked for.

In a statement, the Congress of the People said it was “totally unacceptable that consumers should be punished for the follies of Eskom management and the government”.

Cosatu said the increase could not be justified because it was four times the inflation rate.

The property workers' association — which represents an industry with a combined portfolio of more than R150-billion — said the increase could severely affect the sector.

Association executive Douw de Kock, who also represents the Broll Property Group, said: “[It] will definitely have an effect on the property industry in an economy where vacancy rates are now higher, arrears are not uncommon and many retailers are closing down.”

He added that an increase above 30% incurred an additional approximate cost of R5m², which impacted on tenants' overall budget.

The association legal services manager, Tsakane Shilubane, said it was also of concern that the increase was approved without sufficient transparency and information by Eskom.

“While Sapoa understands the crippling constraints that have left Eskom with few options, the association would like to see Eskom applying best practice and transparency in order to demonstrate a commitment to better supporting the commercial and industrial property sectors,” said Shilubane.

Sapoa chief executive, Neil Gopal, said: “We aim to create sustainable property environments that consume less energy, and therefore not only reduce carbon emissions, but also reduce the expense associated with high energy consumption.”

Eskom requested the price hike in order to fund a R385-billion capital expansion plan over the next five years.

According to a Sapoa statement issued before last week's increase, electricity is already the largest operating expense for commercial property and accounted for 22.6% of operational expenditure in December 2008.

Source: Business Times

Published courtesy of