Electricity production fell even more in July, following the pervious month’s drop when unlawful industrial action at several power plants and a strain on generating capacity at Eskom saw load-shedding across the country ramped up to stage 6, weighing on GDP outcome.
On Thursday, Stats SA reported that electricity generation decreased 7.7% year on year in July, after a 4.0% drop in June further clouding sentiment.
Electricity consumption also fell 6.2% in July.
SA’s economic growth potential has been hindered by electricity supply disruptions. The drop in July’s electricity production will continue to reduce the country’s competitive position and deter investment.
Eskom said on Wednesday that it hoped to see 3,500MW of generation capacity added to the grid within the next six months and another 2,800MW over the next year.
The country’s 46,000MW of installed electricity-generation capacity, which is meant to supply the SA’s peak demand of 32,000MW, is running at no more than 60% of available capacity at any given time due to maintenance, unplanned outages, and an ageing fleet.
The power utility’s ageing power plants, which average 35 years in age, are prone to breakdowns, and heightened criminal activity. Eskom’s damaged infrastructure continues to add to the country’s precarious energy predicament.
Delays and design flaws in the construction of Medupi and Kusile power stations meant that they failed to be the solution government hoped would stave off the current energy crisis.
Absa chief economist Peter Worthington said SA’s economic growth continued to be clouded by the ongoing near-term risks to electricity supply.
“Eskom cautioned in a presentation to parliament this week that despite its efforts to add generation capacity, the risk of load-shedding remained elevated over the coming months, Worthington said.
He said July official manufacturing data due out next week would show how electricity constraints affected the manufacturing sector.
Absa’s July purchasing managers’ index fell sharply to 47.6, below the 50-point neutral mark, signifying a contraction in the sector.
Worthington said that given the significant load-shedding during the month, Absa now forecasts a seasonally adjusted manufacturing output decline of 1.9% month on month.
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