20091208

JOHANNESBURG (Reuters) - South Africa's labour federation COSATU could strike against plans by state-owned utility Eskom to raise electricity prices by 35 percent a year for the next three years, the union's head said on Tuesday.

A steep electricity price increase has stoked fears of more job-losses and inflation as it could lead some industrial majors to shut parts of their operations. South Africa, which emerged from its first recession in 17 years in the fourth quarter, saw its economy lose close to a million jobs this year.

Eskom {ESCJ.UL] says it needs a tariff increase to help raise money to pay for a 385 billion rand power expansion programme. Last week the utility reduced its proposal for an increase to 35 percent from 45 percent after widespread criticism from labour, government and business circles.

Eskom has said it would also rely on borrowing from capital markets and government loans to fund its expansion programme.

"It (35 percent tariff hike ) will spell a disaster, it will make the situation we are talking to now about job-losses much worse," COSATU's General Secretary Zwelinzima Vavi said.

"We will make our submission, we will engage and we have said it very clear it's not something that we will be prepared to take lying down and if there is a need we are prepared to mobilise the society."

Asked by Reuters if he meant COSATU would go on strike to prevent the new tariffs from being implemented, he said: "Yes".

President Jacob Zuma last week raised the prospect of more job losses as the global economic downturn continues to have an impact.

Vavi and former Eskom chairman Bobby Godsell also spoke on measures needed for preserving current jobs and avoiding retrenchments at a business and labour forum.