The South African Reserve Bank (SARB) said it was “extremely” concerned about the current short supply of electricity, which could stifle economic growth and lead to higher inflation.
With delays in connecting mega power plant Medupi and Kusile to the grid and ageing infrastructure, it could be five years before Eskom has a reliable supply of electricity, a SARB Monetary Policy Forum delegation told business leaders in East London yesterday.
Responding to Daily Dispatch questions, SARB advisor Brian Kahn said it was unclear when the current bouts of loadshedding would end, adding that outages were denting the chances of an improved economic growth.
“The fact that we are now going through a period of loadshedding is even extremely concerning because it does mean that supplies to the manufacturing sector and the mining sector is getting cut by 10% automatically and that will constrain output,” said Kahn.
Kahn said Eskom’s unreliable supply came at the cost of jobs as some potential foreign investors put their plans to invest in South Africa on hold over the past two years when Eskom repeatedly warned of constrained supply.
Next year’s growth forecast might not be attained if electricity supply continues being unreliable.
“Although we expect growth to be a little better next year, at around 2.5% versus 1.4% this year, but we see risk on that forecast as a result of electricity supply,” he said.
Kahn said given that Eskom was granted a 13% increase by the National Energy Regulator of South Africa (Nersa) recently, that could hit consumer pockets hard.
“On the other hand there is impact on inflation. We do know that electricity prices are going to increase next year in terms of the Nersa 13% increase which will come into play in the middle of next year. As we understand it they are likely to apply for even higher increases,” he said.
Kahn said the outlook of Eskom’s performance over the next two years was “not rosy”. — siyam@ dispatchlive.co.za/
Power cuts a worry for SA Reserve Bank
With delays in connecting mega power plant Medupi and Kusile to the grid and ageing infrastructure, it could be five years before Eskom has a reliable supply of electricity, a SARB Monetary Policy Forum delegation told business leaders in East London yesterday.
Responding to Daily Dispatch questions, SARB advisor Brian Kahn said it was unclear when the current bouts of loadshedding would end, adding that outages were denting the chances of an improved economic growth.
“The fact that we are now going through a period of loadshedding is even extremely concerning because it does mean that supplies to the manufacturing sector and the mining sector is getting cut by 10% automatically and that will constrain output,” said Kahn.
Kahn said Eskom’s unreliable supply came at the cost of jobs as some potential foreign investors put their plans to invest in South Africa on hold over the past two years when Eskom repeatedly warned of constrained supply.
Next year’s growth forecast might not be attained if electricity supply continues being unreliable.
“Although we expect growth to be a little better next year, at around 2.5% versus 1.4% this year, but we see risk on that forecast as a result of electricity supply,” he said.
Kahn said given that Eskom was granted a 13% increase by the National Energy Regulator of South Africa (Nersa) recently, that could hit consumer pockets hard.
“On the other hand there is impact on inflation. We do know that electricity prices are going to increase next year in terms of the Nersa 13% increase which will come into play in the middle of next year. As we understand it they are likely to apply for even higher increases,” he said.
Kahn said the outlook of Eskom’s performance over the next two years was “not rosy”. — siyam@ dispatchlive.co.za/
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