Price of electricity in SA compared with the rest of the continent – it’s a cheap affair

Earlier this week Eskom CEO Andre de Ruyter said that a potential solution to the much discussed energy crisis would be to reduce electricity demand by increasing prices. With Eskom’s proposal of a 32% tariff increase submitted to the National Energy Regulator of South Africa (Nersa), consumers are likely to feel the pinch. Which begs the question: how do our electricity prices stack up against the rest of the world? MyBroadband used data from GlobalPetrolPrices.com to compare South Africa’s household electricity prices with the rest of the world and found some rather interesting results. For instance, South African residents pay more for electricity than people in most other countries on the continent, with only nine African nations in the dataset paying higher tariffs. The data comprises the household electricity prices per kilowatt-hour (kWh) in 148 countries, providing values in local currency and converted to dollars. This article was first published on MyBroadband. – Asime Nyide

Eskom’s CEO says electricity is too cheap — here is how South Africa’s power prices compare

By Myles Illidge

South Africa’s household electricity prices sit in the more expensive half of the global spectrum, with at least 85 nations paying less per kilowatt-hour, a MyBroadband analysis has shown.

MyBroadband used data from GlobalPetrolPrices.com to compare South Africa’s household electricity prices to the rest of the world.

Its data comprises the household electricity prices per kilowatt-hour (kWh) in 148 countries, providing values in local currency and converted to dollars.

In its latest public dataset, current for March 2022, GlobalPetrolPrices used an exchange rate of R17.64 to the dollar.

Looking at the raw per-kilowatt price, without considering purchasing power, South Africa sits near the middle of the global electricity price spectrum with a R2.56  ($0.145) average price per kWh.

Notably, South African residents pay more for electricity than people in most other countries on the continent, with only nine African nations in the dataset paying higher tariffs.

The chart below compares South Africa’s electricity prices to ten other nations, including the three countries with the lowest and highest electricity tariffs.

South Africa’s electricity prices versus ten other countries (Prices in rands, calculated at R17.64 to the dollar — data from GlobalPetrolPrices.com)

Residents of Lebanon have the lowest electricity prices in the world at $0.003 (R0.055) per kWh, while those living in Libya and Zimbabwe aren’t far behind at $0.004 (R0.070) and $0.005 (R0.080) per kWh, respectively.

South Africa’s electricity tariffs are somewhat on-par with those charged in Colombia, Iceland, Cambodia, and Chile.

However, people living in the three counties with the highest electricity prices in the world pay between 2.8 and 3.2-times more per kWh than South African residents.

Denmark has the highest household electricity prices at $0.465 (R8.20) per kWh, while Germany and Belgium’s prices are $0.441 (R7.79) and $0.410 (R7.22) per kWh, respectively.

South African residents pay more than double the price per kWh than those living in Nigeria — the nation with the highest gross domestic product (GDP) in Africa, according to data from The World Bank.

For reference, South Africa’s GDP in 2021 was approximately $420 billion, and its residents pay $0.145 (R2.56) per kWh, while Nigeria’s — whose GDP was around $441 billion — residents pay $0.052 (R0.92) per kWh.

Household electricity price comparison, adjusted using the PPP conversion factor — data from The World Bank

For a perspective that eliminates the relative strengths of currencies, we analysed per-kWh prices using the World Bank’s purchasing power parity (PPP) conversion factors.

The World Bank explains that PPPs measure the total amount of goods and services a single unit of a country’s currency can buy in another country.

“In other words, PPPs equalize the purchasing power of currencies,” it says.

Notably, South Africa drops from the 86th cheapest of 148 countries to 100th place when considering purchasing power.

This indicates that electricity in South Africa is actually more expensive in relative terms than the raw per-kilowatt price might suggest.

South Africa’s PPP-adjusted electricity price is on-par with Sweden’s, while it sits behind Slovakia and Greece.

Libya becomes the cheapest country when adjusting for purchasing power, followed by Ethiopia and Iraq.

On the other end of the scale, Rwanda becomes the most expensive. The two next-most expensive countries after factoring in purchasing power are Jamaica and Cape Verde.

Eskom CEO says electricity is too cheap

Recently, Eskom CEO Andre De Ruyter reportedly said one solution to South Africa’s energy crisis would be to reduce electricity demand by increasing prices.

“Our electricity is still too cheap,” said De Ruyter.

“Something that is cheap gets wasted; something that is expensive gets treasured.”

De Ruyter also explained that Eskom’s proposed 32% electricity tariff increase for 2023 isn’t simply a guess — it is based on the energy provider’s data.

“The rate increase is a mechanical exercise. We don’t sit and suck up this very daunting number of a 32% increase,” he said.

“This is the extent to which we’ve pushed this can down the road, and we are now at a point that, when you plug in the numbers, that’s what you get.”

Eskom submitted its tariff increase application to the National Energy Regulator of South Africa (Nersa) in September 2022.

Nersa is currently consulting on Eskom’s Multi-Year Price Determination 5 revenue application for the 2024 and 2025 financial years.

De Ruyter acknowledged that the power utility is aware its proposed increase isn’t achievable, adding that it was submitted to “put the marker down” for further electricity prices over time.

Household electricity prices for South Africa and ten other countries are compared in the table below. It shows the cheapest three, most expensive three, and four countries around South Africa.

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Comment from BizNews community member Paul Theunissen:

Dear Alec

In the recent article published, I and many other people I know were particularly annoyed by Andre de Ruyter’s comments about our electricity being too cheap!!

The long and the short of this discussion is:

  1. Eskom has a bloated employee base with employees earning way more than what they should relative to the private sector or anywhere else in the world for that matter. Maybe a very general statement but have read enough to know that there is truth in this.
  2. Eskom employees get bonuses in some instances, for what I have no idea! They should make these all performance related.
  3. Eskom has an excessive level of debt due to it being pillaged for years.

The fact of the matter is that under normal circumstances these costs would have been reasonable and contained and the price we pay for electricity would be more than sufficient.

His statement is akin to me buying a property and bonding it beyond my affordability, living beyond my means incurring shorter term debt and then while already earning an above market related income telling my employer he doesn’t pay me enough to cover my expenses!

Unbelievable!!

In closing you guys are doing an incredible job! BizNews is restoring my faith in media and journalism and as far as I’m concerned is the only reliable independent source of news in SA.Not a day goes by that I don’t tell someone about BizNews and the YouTube interviews that you guys do.

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