SALGA argues that the distribution of electricity by Eskom (or third-party electricity distributors) within municipal jurisdictions will lead to an increased loss of revenue and of opportunity to generate revenue from the distribution of electricity for municipalities. The revenue generated from electricity is used to cross-subsidise other municipal services. Municipalities lost the expertise, know-how, and capacity over time and according to the South African Local Government Association (SALGA), Eskom does not pay for the municipal infrastructure it uses for the distribution of electricity. Unfortunately, some municipalities cannot maintain the electricity infrastructure sufficiently. Municipalities want to protect their exclusive right to distribute electricity within their boundaries in order to bolster revenue collection. A large number of the smaller municipalities are dependent on the income received from electricity sales. Storage operators in rural areas either receive their supply of electricity directly from Eskom or via the local municipalities. This is equal to an average compound annual growth rate of 5,4%, which is significantly higher than the Reserve Bank’s inflation target of 4,5%.Įlectricity supply – captured by municipalities? At the current path, it is expected that South Africa will face a 69% increase in electricity tariffs up to 2031/2032. Should demand drop due to decreased economic activity caused by supply-side constraints, then South Africa will face significant challenges with rising costs. Regarding the cost of electricity, the long-term forecast for electricity pricing in South Africa is largely dependent on demand. In other words, optimistic economic growth forecasts can turn out quite wrong if the future availability of electricity is not taken into consideration. In our opinion, economic growth forecasts should be based on the future availability of electricity, as the latter is the most limiting factor impacting economic growth. Economic growth and job creation are unfortunately directly constrained by the lack of available and reliable electricity supply. There is a close correlation between the availability of the surplus supply of electricity and the economic growth response of our economy. The manufacturing of primary agricultural commodities and products into value-added food, feed, and fibre products of value to the end consumer is the strongest growing sector in the manufacturing industry of our economy. The strong growth in primary agriculture in terms of production sustains an equally strong secondary agricultural sector. On 31 May, Agbiz hosted a workshop that brought together experts, agribusinesses and the mining sector to investigate how companies can secure their energy needs.Įconomic growth in South Africa is dependent on the availability of reliable and sufficient electricity supply and less on the cost of electricity, as primary industries have limited potential to reduce their consumption. However, the cost of storage is becoming exorbitant as the reliable supply of affordable electricity dwindles year after year. Storage operators store the harvest safely by utilising electricity generated from coal-fired plants distributed directly by Eskom or municipalities. Producers harvest the sun by utilising this energy to convert rainfall, inputs, and labour with precision and without interruption into valuable starches and oils.
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