Related Articles
Top Stories
Feb 13 2012 12:15
Miner Xstrata says it has brought forward maintenance on two furnaces to assist Eskom to save power.
Feb 13 2012 10:43
Although jobs were created, the economy is still 420 000 jobs short of the peak employment level before the 2009 global financial crisis, says Adcorp.
Feb 13 2012 07:58
Greek lawmakers have approved a new round of drastic austerity measures after a long day of street battles between police and protesters left dozens injured.
Johannesburg - It is crucial for power utility Eskom
to manage its wage dispute swiftly so as to not jeopardise electricity
production at a stage when demand, and thus production, is starting to recover.
Further pressure on the national utility has come in the form of wage
demands. The Eskom union, Solidarity, has requested a 14% wage increase while
Eskom has offered 8%, and as a result the union is threatening to strike.
This comes on news that electricity consumption increased to -4% year-on-
year (y/y) in May from -6.2% in April, with the increase in consumption growth
highlighting the distortion created by fewer working days in April, which
caused a more significant decline in energy consumption than in March.
Even so, the improvement from March's -4.6% y/y decline suggests that some
improvement in mining and manufacturing production could have possibly occurred
in May, paving the way to the recovery expected in Q3.
Electricity production growth improved further in May, rising to -4.7% y/y
from -5.7% in April. This marked the fourth consecutive increase in production
growth from February's -11.2% y/y decline, which is promising for GDP growth
improvement in Q2 2009.
However, the steep rise in electricity imports raises a
major concern with regards to Eskom producing enough power when the economy is
back in full swing. Electricity imports increased by a considerable 23% y/y in
May. In contrast, electricity exports declined by -1% y/y, which should have
provided some room for movement on the supply side.
Eskom has been granted a 31.3% tariff increase for the next year, in order
to finance the electricity infrastructure expansion in order to increase
production capacity.
Although the tariff increase will support Eskom's plans, one remains
concerned that this significant rise in the price of electricity will lead to
substantial inflationary pressures, further slowing consumption demand and
export growth, as well as leading to a rise in unemployment with companies
trying to manage production costs. In this way, the tariff increase is seen as
threat to the recovery in growth, which is expected for Q3.
- I-Net Bridge