Power cuts expected soon

Johannesburg - A decline in electricity production raises the likelihood that the economy will again experience a period of blackouts early in the first quarter of 2010.

Added to this, Eskom has already scheduled a number of energy station shutdowns for maintenance work in preparation for the 2010 World Cup in early 2010. This may be a threat to the country's energy capacity, just as the economy begins to recover from the recession.

This comes as data on Thursday shows electricity production growth declined significantly to -3.5% year on year (y/y) in October, from -0.4% y/y in September, albeit also reflecting a distortion related to October 2009 having a higher energy production level as compared to other months in the year.

On a m/m basis, production grew 1.1% in October, following a -0.6% decline in September. Nevertheless, the decline breaks a seven-month upward trend in electricity production growth, which had been in correlation with the improvement in electricity consumption growth.

Electricity consumption growth improved further in October, rising to -1.2% y/y in the month, from -1.7% y/y in September. The rise in consumption growth is indicative of the continued progression in economic activity in recent months. Particularly, one anticipates a further improvement in manufacturing production, in line with the rise in electricity consumption in the month.

In line with the decline in domestic production, growth in electricity imports rose by 21.2% m/m following and -14.2% decline in September. On a y/y basis, electricity imports rose to a shocking 72.9% y/y in October, after declining to -11.9% y/y in September. However, much of this rise was due to a statistical distortion tied to a much lower value in electricity import in October 2008 versus other months during that year. Electricity export growth declined to 2.4% y/y in October from 6.8% y/y in September.

- I-Net Bridge