(3 minutes)
· Full-time regulatory member of the National Energy Regulator of South Africa (Nersa) Nhlanhla Gumede said a decline in electricity demand among electricity guzzling industries shows that power costs were still at the centre of South Africa’s economic troubles.
· Economists maintain that load shedding was the biggest culprit when the economy contracted in the final quarter of 2019 and the first quarter of 2020.
· They feel blaming everything on Covid-19 may be a wrong diagnosis.
Full-time regulatory member of the National Energy Regulator of South Africa (Nersa) Nhlanhla Gumede said a decline in electricity demand among electricity guzzling industries shows that power costs were still at the centre of South Africa’s economic troubles.
His statement comes after Statistics South Africa released GDP figures for the first quarter of 2020. It showed that the economy contracted by 2%, extending the country’s recession.
Economists maintain that load shedding was the biggest culprit when the economy contracted in the final quarter of 2019 and the first quarter of 2020. They feel blaming everything on Covid-19 may be a wrong diagnosis.
The mining and quarrying industry contracted by 21.5% in the first quarter, while the manufacturing industry contracted by 8.5% over the same period, according to the report. Seven of the ten manufacturing segments reported negative growth rates in the first quarter.
Gumede pointed out that, with the arrival of Covid-19 Eskom faced a challenge. While costs and revenue may be fixed and growing, sales that Eskom has projected might not often be realized. South Africa is still an economy with prominent mining and manufacturing sectors. Therefore, the economy needed to take steps to reverse the escalation of electricity costs.
