South Africa's proposed power tariff increases could have a big impact on the economy, despite businesses agreeing that they would need to double in order to meet growth plans.

Eskom plans to increase power tariffs by 60 per cent and Business Unity South Africa's (Busa's) Professor Raymond Parsons believes the economy is not in the best shape to receive it.

He was speaking at the National Energy Regulator of South Africa's public hearings into Eskom's proposed tariff increase and said the economy's ability to adapt to power-price shock was "not perfect".

Previously, Busa has called for smoother transitions to allow the economy to adapt to increasing prices, Engineering News reports.

"If relative prices are wrong, then clearly they have to be corrected, any first-year economic student can tell you that. But the cleverness lies in how to get this right. That is the difference between policymaking and theory," he explained.

Meanwhile, Eskom suffered another blow after it was revealed that there is a 40 per cent shortage in the number of artisans working in the country.

Figures from trade union Solidarity showed that 346 engineers and artisans had left Eskom in the past year and this could affect any expansion plans particularly when the country requires twice the number of engineers being produced by universities.

Source:

SA economy cannot absorb 60% power-price shock, 27/05/08
http://www.engineeringnews.co.za/article.php?a_id=134220

Eskom loses 346 artisans & engineers in a year, 27/05/08
http://www.moneyweb.co.za/mw/view/mw/en/page662?oid=208530&sn=Blog%20detail%20back%20button