International banks warn RSA to improve energy provision

by Richard Kilner

Story link: International banks warn RSA to improve energy provision

Jean Francois Mercier, Citigroup economist, has said that focusing on energy efficiency is a part of the solution to South Africa’s energy problems.

Mercier has also said that co-generation with the private sector could be an option.

The world’s largest international banks have warned of economic growth forecasts could need massive revision following the closure on Friday of mines and the worsening power difficulties.

The South African economy is already struggling with inflation and the electricity supply problems the country is facing could exacerbate the situation.

The Reserve Bank is tasked specifically with keeping inflation under control.

The Reserve Bank set a target for inflation of 3-6%, and it has already been breached with inflation predicted to reach 8% following the increasing cost of food and petrol.

Power cuts could negatively affect the retail sector, mining and manufacturing, with a longterm impact on investment.

The inability to guarantee power supply could damage investment prospects for the country, as its growth predictions fall, Mercier has said.

South Africa’s growth was 5% in 2006, and expected to be 4.8% for 2007, however it could fall as low as 3% this year.

Mercier has also stated that the financial markets of the country could be imperilled by the serious energy generation issues.