South Africa’s energy sector was a motivating factor behind S&P Global’s decision not to downgrade the country to junk status.

According to S&P, improvements in the energy sector will likely reduce some of the economic bottlenecks and pending finalisation of labour and mining reforms could engender a positive confidence shock.

Anoj Singh, Chief Financial Officer of Eskom, has welcomed the affirmation of the sovereign rating by S&P.

“Their statement has confirmed that the strides achieved by Eskom and the country in stabilising electricity supply have contributed to the broader economic initiatives to improve economic growth. This decision encourages the positive path that Eskom has embarked on to improve its credit profile and become financially sustainable,” said Singh.

In their statement S&P states that they saw “several structural measures as key” in placing South Africa’s economy on firmer footing and helped it to maintain its investment-grade rating as follows:

“The first is provision of a reliable source of energy, where we observed progress. Eskom, the state-owned power utility, has improved the energy supply through a better maintenance programme, managing demand in peak periods, and by additions from its new power plants and from independent power producers. The combined measures have helped eliminate load shedding, which was prevalent in the last winter cycle and depressed overall 2015 economic growth.”

Singh adds, “We will continue to vigorously ensure that the state of the electricity system remains stable. S&P Global had also placed Eskom’s ratings under review so we believe that this decision will bear positive results for Eskom’s credit profile, taking into account Eskom’s extra-ordinary support from government.”

This comes as Eskom marks close to 300 days (except for 2 hours and 20 minutes) without load shedding.

 

85.5% electricity access

The Stats SA General Household Survey for 2015 shows that 85.5% of South African households now have access to electricity.

According to the survey, the percentage of households connected to the electricity supply from the mains has increased consistently from 77.1% in 2002 to 85.5% in 2015.

Having nearly 90% of households in the country connected to the grid is in line with government’s ambition of achieving universal electricity access by 2025.

According to the power utility, Eskom and municipalities will spend R17.6 billion over the next three years to connect over 840 000 households to the national grid, with an additional 70 000 households to be connected through non-grid solar electrification programmes.

Separately, Stats SA’s report on electricity generation showed that electricity production rose 0.8% year-on-year in April 2016 compared to a yearly figure of -4.3% reported in March. Month-on-month electricity generation in April also increased by 0.3% compared to -1.8% in March. The report also shows that electricity consumption has increased marginally.