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South Africa’s electricity price shock

South Africa’s electricity price shock

Electricity in South Africa is among the most expensive in the world, a new survey from NUS Consulting has shown.

According to the group’s International Electricity & Natural Gas Report and Price Survey 2013, South Africa has the most expensive natural gas and the 15th most expensive electricity out of 18 countries surveyed.

Electricity prices in South Africa showed the third-highest increase of 12.3% over the survey period, while the price of natural gas rose 101.7% to 12.55 US cents (R1.25) per kilowatt hour.

Electricity prices in SA are set to increase by an average of 8% for the coming year 2013/14, in line with the Multi-Year Price Determinant (MYPD) granted by National Energy Regulator of South Africa (Nersa) earlier this year.

“The short and long term outlook for electricity is for prices to increase as Eskom continues to deal with generation and infrastructure costs,” the NUS report said.

Electricity price changes

Electricity price changes (Click to enlarge)

Looking at gas

Aside from PetroSA, which produces gas for its own purposes, the gas market in South Africa is dominated by Sasol Gas.

According to NUS the survey, Nersa has applied a cap on gas prices in order to protect consumers, but has approved allowable revenue of R936 million for the 2013 financial year running from July 2013 to June 2014 and R1 billion for July 2014 to June 2015.

Though gas only accounts for 3% of South Africa’s current energy consumption, it holds great risks to industrial users’ future profitability. Industrial users are a great contributor to employment.

South Africa’s total gas reserves stood at 770 billion standard cubic feet in March 2012, was the only country surveyed without any forecast price reductions for gas.

“Going forward, gas prices will also increase and these prices could rise for industrial consumers by as much as 30 to 40 percent (at a maximum),” NUS said.

Gas price changes

Gas price changes (Click to enlarge)

DA Shadow Deputy Minister of Energy, David Ross, called on Energy Minister, Dipuo Peters, to take the future of gas, its pricing, as well as its contribution to the national energy mix into account before releasing the draft Integrated Energy Planning Report in July 2013.

“In the meantime, the DA will make an urgent submission to the National Energy Regulator of South Africa (NERSA) to review the current method of increasing the price of different energy sources simultaneously,” Ross said.

“The continuous increase in the price for energy in South Africa not only hurt South African households but also places significant constraints on economic growth and job creation,” Ross said.

“We need to plan effectively for our future to affordably power South Africa into the future.”

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  • RK

    Doesnt take a survey to figure this out . We knew we getting ripped all along…

    • Space_Chief

      Wow! Surveys like this are not meant to preach to the choir but to be used as evidence that we’re being screwed over by ESKOM, ANC and DA.

      • RK

        Whats the purpose of evidence if theres not positive outcome for the masses ?

        • Space_Chief

          Masses? That’s kind of Marxist. Let’s avoid that terminology. Maybe let’s call people the public or just people or South Africans.

          Evidence is important otherwise you don’t know if you’re screwed over or not, and you can’t convince other parties. You also can’t bring about a legal challenge against whoever it is who is doing the screwing over.

  • “the 15th most expensive electricity out of 18 countries surveyed.” and “among the most expensive in the world?” How do you reconcile those two statements? It makes no sense.

    • And down from 11th last year?

    • Fourhundredkg Bobbejaan

      I hear the NUS Consulting Group is owned by Mr. A. Nus and Mr. P. Nus.

  • Warchylde

    Although the comparison above doesn’t truly show how much this impacts the everyday Joe on the streets, how nice it would if the free loaders all started paying :s

  • bwp

    Black In -> Black OUT

  • kabal

    I don’t get it? So of 18 countries surveyed, only 3 other countries have cheaper electricity.
    Did the reporter not actually understand the survey/table?

    • Sir Rants-a-Lot Llew

      “and the 15th most expensive electricity out of 18 countries surveyed.”

      The writer understood the table fine.

      • kabal

        except the first line of the article states “Electricity in South Africa is among the most expensive in the world”

        this is a blatent lie. if it is cheaper than the united states, most of western europe, australia and new zealand, japan, brazil, etc, etc, how it is among the most expensive in the world.

        seems research is dead.

        this is equivalent to saying “of a set of numbers [1,2,5, 10, 20, 30, 40, 100], the number “2” is amoung the highest, which is technically true, it’s higher than the lowest

  • Sir Rants-a-Lot Llew

    None of this is news. We know our electricity is some of the highest (Although a conduct of 18 countries isn’t really very large considering there are over 190 countries in the world)

    Either way, poor infrastructure planning, mismanagement of funds and poor tender handling has all led to this.

  • TPM2

    SA has huge natural resources to subsidise its people. this govt is doing us in ! we need serious changes to alleviate suffering

  • Jan Karl Hough

    The statements of current prices are meaningless without using a PPI to show relative costs to local consumers. This would make us even LESS expensive, not more expensive than most advanced countries.Then in the comparison we need to see how we compare to third world countries.Without this the info on prices is useless and the conclusion made clearly wrong.

    • MHBGT

      I agree that we need another measure to scale the prices.
      BUT I would say that our relative costs are much higher than the United states, or Western Europe. This is why the steep Electricity price increases in such a short period of time affects us much more in the developing world. Our disposable income is simply not enough to be able to absorb the blow.

      So the opposite would be true, this would make us even MORE expensive, maybe not the most, but it would atleast illustrate the greater effect it has on us.

      • Jan Karl Hough

        I am afraid I don’t get this. How do you justify your statement: “I would say that our relative costs are much higher than the United states, or Western Europe. This is why the steep Electricity price increases in such a short period of time affects us much more in the developing world.”? Developed country consumers would have an equally valid complaint.

        The way to clearly show relatives costs of the same goods (e.g. electricity) in different countries is a PPI (or the BigMac index) adjustment. This is the easiest to understand – simply convert (scale) prices.

        If you want to see the cost of items relative to average salary, all in the same country, then this is more difficult, but I am sure it is available somewhere on the web. For sure transport, rent and property, and many food item prices are much more expensive in developed countries compared to their salaries than in ours. Other things are cheaper, cars, electronics, many manufactured goods… We simply need to find the percentage cost of a kilowatt-hour of electricity to consumers in different countries. Cannot be that difficult to find….

        • MHBGT

          Maybe my phrasing of that statement is incorrect, “relative costs…” but my point is that, it boils down to disposable income. While it may cost them more in terms of absolute value (shown in this table). It forms a smaller percentage of their income.

          If you look at what our electricity prices were not too long ago, (when it was among the cheapest), to what it is now (comparable to the most expensive), electricity now takes up a much larger portion of the household budget.

          And yes, while we can use measures such as the BigMac index, it won’t tell us if the people of that country can actually afford a BigMac. Which is basically where I’m going with this.

          As you mentioned, some items are more expensive (eg. food), but others may be cheaper (cars, technology -although I might add that generally in South Africa, our retail prices of consumer technology, actually costs less or about the same as Europe). But what would you choose as a good “scaling factor” ? I think Electricity is too basic a necessity to be compared to basket of goods, and as you said, its a bit harder to compute the average salary.

          This is not even taking into account that European countries now implement Real time pricing strategies, to curb demand by increasing the price when the load is peaking.

          • squish102

            I tend to agree with the disposable income piece. After living in SA before the price hikes in electricity, I was still very conscious of the price of electricity and would switch lights off etc. Then after moving to the US (with the higher price) electricity costs is something you don’t even bother with. Not a big number in your monthly budget. Although summer the electricity is a little higher, but that is with all house Aircon running.

  • McGyver Guy

    Looks like we are the only 3rd world country on that list charging 1st world prices. That what you expect in South Africa…

  • xdoomx

    This looks more like we are the cheapest in the world compared to those countries.

  • Sello Mohale

    And you still talk about a better life for all!

    We used to have the cheapest electricity in the whole world!

  • Farmers are F##ked

    We certainly have the Most Stupid energy CEO in the world. If you show
    Mr Dames a wind turbine he will ask where the coal goes in. High time we
    got some energy muscle in SA. Privatise Eskom, allow competition as
    with Telkom and you’ll see Eskom die a sudden death as wind and solar
    companies show it how the 21st C works. By the way, I’m a farmer.
    Farmers do not use their water pumps for up to six months of the year so Mr
    Dames came up with the following monthly costs per point so you pay pay pay before you turn
    on a light on farms. That’s R1,500 p/month minimum from every farmer/sucker. Only in Africa. Viva.

    Service and Administration Charge @ R15.45 per day for 30 days R463
    Network Access Charge @ R18.61 per day for 30 days R558
    Network Demand Charge 3,167 kWh @ R0.1741 /kWh R551
    Reliability service charge 3,167 kWh @ R0.0027 /kWh R8.50
    Energy Charge 3,167 kWh @ R0.6969 /kWh R2207
    The energy rate includes the 3.5 c/kWh cost of the environmental levy.

  • John Bufton

    I find the table confusing. I do not get a flat charge on the kWh units used. I have fixed/standing charges of over R1,100.00 a month BEFORE I’ve used a single kWh.
    So if I use 100kWh per month my bill with total R1,300.00 a month. This equates to R13 a kWh.
    I actually use about 500kWh per month as a single person (who cooks with gas) and my monthly total is around R1,700 so my average cost per kWh is R3.40.

  • Alan Kennedy

    We’d be doing better if we hadn’t been so asleep on Kudu and Moz gas

  • Nkosi_RZA

    It is a shocker, the countries named in survey is not 3rd world except for SA and their average income a day is R1400 + where our average income is R280+ a day, that is the shocker.

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