Business

Consumers pushed to knife’s edge

Cape Town – As things stand at the moment, consumers are on the knife’s edge, Neil Roets, CEO of Debt Rescue told Fin24 on Tuesday.

“If the decision by Nersa was to grant Eskom’s request for a 25% rate increase, it would have added to the financial strains of consumers, especially in light of all the other price increases, like the petrol price increase, the increase in municipal rates and the increase in interest rates that will most probably take place later this year,” said Roets.

“These price increases filter through to the prices of other goods and services, which makes the situation even worse.”

Consumers will be hit hard on Wednesday as various price increases come into effect, adding to the already heavy burden they have to bear.

The petrol price will go up by more than 40c per litre on Wednesday. Petrol will cost R13.34 per litre at the coast and R13.77/litre in Gauteng if you’re using 95 octane, for instance.

Commuters in the Western Cape will have to dig deeper for a train ride from Wednesday with fare increases for single tickets of between 50 cents and R1, weeklies between R1 and R2 and monthlies between R2 and R38 – depending on travel zone and class.

Metrorail also announced at the end of May that it will increase its Gauteng train fares on July 1. Commuters will pay 50 cents more for single tickets, R1 more for return tickets, and 15 cents more a trip for weekly and monthly tickets.

Cosatu in the Western Cape has indicated that the recent fare increases announced by Metrorail are unfair and will be opposed by the union.

A glimmer of hope for consumers came on Monday when national energy regulator Nersa rejected Eskom’s application for a further increase in tariff, over that already approved.

According to the City of Cape Town’s executive deputy mayor Ian Neilson, the decision by Nersa means that the tariff increases for the City’s own electricity customers of 10.82% will be implemented on July 1 2015, based on the 14.24% increase of Eskom’s bulk tariffs to municipalities, as previously approved by Nersa.

Neilson said the City of Cape Town welcomes the decision by Nersa to refuse Eskom’s application for a further increase in tariff, over that already approved.

Meanwhile, in Gauteng the new toll tariffs and monthly caps for registered users will come into effect on Thursday July 2.

This is the first part of the new toll dispensation announced by Deputy President Cyril Ramaphosa in May.

According to Sanral’s head of communications Vusi Mona, account holders are the first to benefit from the new dispensation with reduced tariffs per kilometre and monthly caps on all classes of vehicles.

For instance, for light vehicles the monthly cap will now be R225 for Sanral account holders – down by 50% from the R450 per month that has been levied up until now.

“The introduction of the lowered standard tariff that is now the same as the e-tag tariff will provide relief to users who are not registered,” Mona said on Tuesday.

While the decision by Nersa was not to grant Eskom’s request, that is not the end of the story, cautioned Roets, because Eskom has been given another opportunity to reapply for an increase.

“We can just hope that Nersa sticks to its decision,” he said.

At the same time he pointed out that the Greek crisis is also likely to have an effect  on consumers.

“If Greece decides to leave the European Union, that could have a negative impact on the rand, making imports more expensive,” explained Roets.

He said consumers who find themselves in a situation where they are over-indebted, should, however, not lose hope.

“Debt counselling was introduced by the National Credit Act to assist over-indebted consumers to pay off their debt in an affordable manner without losing their assets. The system is continuously improving and has helped thousands of consumers who have been struggling because of the difficult financial climate,” said Roets.

Fin24

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