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SA’s power prices approach affordability ‘tipping point’

Engineering News Online

29 August 2011: South Africa’s electricity prices, which have more or less doubled from an average real level of 25c/kWh in 2008 to the current level of 50 c/kWh, were approaching an affordability “tipping point”, the Energy Intensive User Group (EIUG) cautioned again on Monday.

Chairperson Mike Rossouw said that coordinated regulatory, policy and investment efforts were required to moderate the price path to mitigate further deindustrialisation and to ensure that the policy aspiration of extracting further value from the country’s minerals ahead of export could be achieved.

Some smelters had already closed partly as a result of rising administrative prices, including Exxaro’s Zincor, while the margins at others were becoming increasingly unattractive. The EIUG was currently conducting a survey of industrial and mining firms to improve visibility of the level of vulnerability.

Current and possible future tariff increases could lead prices to rise beyond 110c/kWh level by 2020, which the EIUG warned would result in disinvestments by firms dependent on competitively priced power.

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