South Africa power crisis costs 1.3$ of GDP

The South African energy regulator has estimated that the cost of national power shortages during late 2007 and early 2008 to have cost the economy about R50-billion (about $6.4-billion) in lost potential.

The National Energy Regulator of South Africa (Nersa) said that the economic impact of load-shedding had been estimated at R75 per kWh.

Nersa CEO Smunda Mokoena said that “the supply shortage caught South Africa by surprise,” and that an inquiry was necessary to ensure the prolonged stability of power generation and supply.

The knock would wipe off over one percent of the country’s GDP (PPP), which was estimated at about $470-billion for 2007.

The Nersa inquiry found that the country’s national power utility, Eskom, had responded speedily and appropriately to the power supply shortage. However, there have been serious reservations around Eskom’s disclosure or the problems it faced. Eskom had, well into the crisis, broadly suggested that there was no problem, until an investigative programme, Carte Blanche, showed that coal stocks were dangerously low.

The inquiry did, however, identify a potential conflict of of interest between the generator of electricity and the system operator. This effectively undermined the security of the system.

“We are very sceptical that current procurement is being done by Eskom [and] not by government,” said Mokoena.

Mokoena added that procurement of generation capacity, including independent power producers and co-generation facilities, needed to be managed by a professional agent that was independent of Eskom.

“The sooner we establish an independent power procurer the better,” he said.
Africa’s largest utility has a R343-billion ($44-billion), five year expansion programme aimed at beefing up generation and supply.