Western Cape Business News

Send  Share  RSS  Twitter  03 Jul 2011

ELECTRICITY: Electricity Increase Dents Business


Recent Western Cape Business News

THE 20 percent increase in the price of electricity will be a blow for business and most firms would have very little option but to pass on the increases to their customers, says the Cape Chamber of Commerce.

The Chamber appealed for the development of a gas industry which it saw as one of the best ways of bringing relief to energy-intensive industries.

Ms Viola Manuel, Executive Director of the Chamber, said that businesses already paid higher prices for electricity and the 20 percent price hike was on a high base so it would really hurt. The July increase should be seen in the context of a whole series of electricity price rises over the last few years and with more increases to come.

Most of the annual increases have been in the region of 25 percent while the inflation rate has been below six percent. This has put businesses under severe pressure. The savings that could be made have, in most cases, already been made. They now have no option but to pass the price increases on to consumers.”

She said this would make their products and services more expensive and it would be more difficult for local manufacturers to compete with imported products while exporters were losing their competitive edge.

The increases are also hurting domestic consumers and bigger chunks of the household budget are being spent on electricity. This means that there is less money to buy food and other items so there is less business for shops and other service providers.”

Mr Peter Haylett, chairman of the Chamber’s Industrial Focus Portfolio Committee says some businesses had already started using alternative energy sources. “One of them is Villiera Wines which has installed hundreds of solar panels on their cellar roofs. Pick ‘n Pay has put solar panels on the roof of one of its Gauteng supermarkets in a bid to reduce its electricity bill. If this proves worthwhile they will do it on other stores and their rivals are sure to follow them.”

He said that making more use of natural gas or LPG was one of the best ways to save as it was a more efficient fuel than electricity for heating purposes.

Many businesses and industries would like to use more gas but it is in short supply and we will need to import natural gas until we can develop our own resources. Attempts to do so have been frustrated by the lack of a gas terminal and other facilities.”

He said the Chamber believed that a gas industry was essential for the Western Cape and everything possible should be done to facilitate the importation of gas.


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