Thursday, 2 October 2014

Faced with a huge energy crisis, SA's total government debt increased from 27% of GDP in 2009 to 63% in 2014

South Africa's total government debt has increased from 27% of GDP in 2009 to an unsustainable level of about 63% of GDP - over R2 trillion.

Municipal debt. South Africa’s local government owes Eskom just under R3 billion in unpaid electricity with just under R2 billion unpaid for over 90 days. The biggest delinquent municipalities are from the Free State (over R1 billion owed), Mpumalanga (over R800 million) and the North West (just under R400 million). Matjhabeng (Welkom) and Emalahleni (Witbank – where Eskom generates much of its electricity) owe so much, it is hard to imagine there debts to Eskom ever being repaid.

What is clear is that we are in for a hard time in the next five years or so. Load shedding will become part of our lives and we will need to get used to it. Eskom’s much-needed change of maintenance philosophy will reduce its generating availability for 2015 by 7,400 MW, 5,900MW in 2016, 4,200MW in 2017, 2,200MW in 2018 and by 1,100MW in 2019. Clearly all such ability to meet such timelines is dependent upon Eskom’s funding and engineering capabilities. Both of these are in short supply.

Eskom may take years to start all six units at its Medupi power plant, according to a National Planning Commission member.
The utility expects to connect the first of six units at its coal-fired 4 764-megawatt Medupi facility by the end of this year.

“According to senior Eskom sources, the second unit is scheduled to come online two-and-a-half years after the first and then the subsequent units at six-month intervals,” Anton Eberhard, a planning commission member and professor at the University of Cape Town’s Graduate School of Business, said today.

“Due to political pressure to show progress, they diverted resources away from the remaining units to focus on getting the first commissioned.”

Labour strikes and contractor errors pushed Medupi’s plans back and Eskom last month said the plant was 73% done. The first unit was supposed to be commissioned in 2012, Eskom said on its website.

This is not all – we can expect electricity price increases significantly above inflation. Our 30-year investment holiday where we enjoyed cheap and abundant electricity is now well and truly over.

Links to the full articles:

Ticking down: SA's (energy) clockwork orange

Few years before all Eskom’s Medupi units come online

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