Investec warns of energy sector’s negative impact on output, GDP growth
Eskom’s declining energy availability factor (EAF) is expected to have a negative impact on the country’s industrial output for the fourth quarter of 2019, as well as gross domestic product (GDP) growth for the fourth quarter of 2019 and the first quarter of this year, warns financial services company Investec.
Electricity production contracted by 2.8% year-on-year in November 2019, while Eskom’s EAF decreased to 65.8%.
After substantial unplanned outages, Investec estimates the December EAF ratio could be even lower, at 60.2%, which the company laments “heralds an even more severe contraction in electricity production in that month”.
Owing to this, the fourth quarter’s GDP is likely to have contracted by more than 1% quarter-on-quarter, following the 0.6% quarter-on-quarter contraction recorded in the third quarter.
The first quarter of each calendar year has seen a contraction in GDP over the past four years and Investec laments that embattled Eskom has warned of increased maintenance over the coming months, as well as even greater losses to the grid from unplanned and planned outages for this year.
In the absence of substantial repair of South Africa’s electricity capacity, during which adhering to planned maintenance regimes is key, Investec says producers relying on State-supplied electricity “risk their productive capacity reducing even further going forward, particularly as power stations age further”.
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