Electricity crisis 'costs SA R120bn a year'

SA's electricity crisis costs the country R120 billion in a single year, or about 5% of GDP, according to Free Market Foundation executive director Leon Louw. He said on Thursday that the cumulative loss indefinitely into the future was about 1% of economic growth, with commensurate losses in employment and development.

To get one's head around the enormity of the figure, R100 billion could build one power station, buy 500,000 cars or clothe all South Africans for three years. "Another energy crisis would be calamitous. We have lost the equivalent of the entire housing backlog, more than the entire road maintenance and construction backlog and the equivalent of a few mines," said Louw, who believes the reason for the recent crisis, which culminated in early 2008 with the near collapse of the national grid, is failure to make the electricity market more dynamic and competitive.

Speaking at a conference about unlocking the electricity grid, which discussed the different independent system and market operator models, Louw said there was a natural resistance to change. "However, if the future is to be characterised by prosperity instead of stagnation, what worked before should be retained and built on, and what failed should be reformed," Louw said.

This reformation is slowly making its way into the electricity market. Among the proposals is that there should be an independent system and market operator. The idea behind the independent system and market operator is that it would facilitate and expedite a more efficient electricity market, including the entry into the market of additional power producers.

The proposal has become government policy in principle, hence the Independent System and Market Operator Bill, which is open for public comment. "The extent to which the independent system and market operator contributes to ameliorating and ultimately solving our energy crisis will depend largely on which independent system and market operator model is adopted," said Louw.

Source: BusinessLive Electricity crisis 'costs SA R120bn a year' BusinessLive, 09 June, 2011

For text: http://www.businesslive.co.za/incoming/2011/06/09/electricity-crisis-costs-sa-r120bn-a-year

First published by BusinessLive, South Africa

FMF Policy Bulletin/ 14 June 2011
Help FMF promote the rule of law, personal liberty, and economic freedom become an individual member / donor HERE ... become a corporate member / donor HERE