02 May 2018

Electricity update: electricity production moderated to 1.2% y/y in March, while consumption dipped by 0.1% y/y

Annabel Bishop

Chief Economist

Figure 1: Electricity consumption vs economic growth (% change y/y)
  • Electricity generated in March moderated to 1.2% y/y, following February’s rise of 2.0% y/y. For the year to date electricity production increased by 1.8% y/y.
  • From the consumption side electricity fell by 0.1% y/y in March, after rising by 0.4% y/y in February. For the quarter however electricity distributed rose slightly by 0.5% y/y.
  • Although the recently appointed Eskom board has gone a long way to lift investor confidence, many difficulties still lie ahead for the ailing SOE.
  • This was reiterated by acting CFO, Calib Cassim, who together with other members of the Eskom board briefed the portfolio committee of public enterprises last month. Cassim stated that “(t)he year ahead will be challenging financially as the power utility has to contend with low tariff increases granted by the regulator and municipal debt”.
  • Deputy chairman of Eskom, Mabaso-Koyana indicated that “(t)he final turnaround strategy of the company will be finalised by September 2018”. She further stated that “(p)art of the areas to be addressed include securing consistent tariffs, as well as restructuring Eskom’s costs”.
  • On a positive note, acting CEO, Phakamani Hadebe, provided reassurance around speculation of imminent load shedding at a briefing today at Megawatt Park. He advised that “(l) oad shedding this winter is unlikely as plans have been put in place to deal with coal shortages and maintenance”.
  • Additionally he stated that Eskom “(c )ontinues to fast-track its build programme with 6382 MW to be commissioned over the next 5 years”. This will be essential for Eskom “(t)o support the network sufficiently and to ensure that South Africa has optimal base load capacity and transmission infrastructure to grow the South African economy”.
Figure 2: Electricity production and consumption (%)
Figure 3: Eskom’s average tariff adjustment