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South Africa faces a serious electricity supply crisis over the next 3-5 years. Eskom has embarked on a belated supply capacity building programme in order to restore balance in the electricity market. The most immediate problem is in the field of electricity generation and coal supplies to Eskom’s coal-fired power stations, as well as transmission; however, the infrastructure backlogs in municipal distribution are lurking in the back ground. Fast growth in electricity demand in recent years and an official moratorium on capacity expansion (2001-4) has reduced the reserve margin to worrying low levels where the stability of the entire grid has become compromised. Economic life in SA is adjusting to scheduled load shedding and power rationing and households, industry and commerce face steep increases in electricity tariffs. While it is difficult to quantify the economic impact, there is little doubt that the electricity supply crunch will exert a constraining influence on economic growth until it is solved. The entrance of independent power producers combined with increased efficiency in electricity consumption (read: power conservation and more realistic electricity pricing) has the potential to lift SA from the woods on the electricity front without seriously damaging medium-term economic growth prospects.
