SA’s reliance on coal to generate most of its power makes it an environmental pariah but it’s also helping keep inflation in check, according to S&P Global Ratings.
While energy prices have soared as European nations scramble to find alternatives to Russian gas supplies after its invasion of Ukraine, power utility Eskom has been left relatively unscathed as it sources coal.
“One of the reasons that SA’s inflation is more manageable than in other countries is as Eskom is largely a coal-fired generator and the coal is locally sourced, mostly under long-term contracts,” Omega Collocott, S&P director of corporate ratings for the country said.
That means the world’s 13th-biggest greenhouse gas emitter “ironically doesn’t have as much inflationary pressure as of dirty power generation”, she said.
Inflation in the eurozone has averaged 7.9% from March and 6.1% in SA.
Dirty coal is keeping SA’s inflation in check: S&P
Image: Thulani Mbele
SA’s reliance on coal to generate most of its power makes it an environmental pariah but it’s also helping keep inflation in check, according to S&P Global Ratings.
While energy prices have soared as European nations scramble to find alternatives to Russian gas supplies after its invasion of Ukraine, power utility Eskom has been left relatively unscathed as it sources coal.
“One of the reasons that SA’s inflation is more manageable than in other countries is as Eskom is largely a coal-fired generator and the coal is locally sourced, mostly under long-term contracts,” Omega Collocott, S&P director of corporate ratings for the country said.
That means the world’s 13th-biggest greenhouse gas emitter “ironically doesn’t have as much inflationary pressure as of dirty power generation”, she said.
Inflation in the eurozone has averaged 7.9% from March and 6.1% in SA.
Image: Bloomberg
However, South Africans might be hard-pressed to come up with other redeeming qualities about the power utility, which generates 80% of the nation’s power from coal and is closing in on record annual power outages just seven months into the year.
“Whether electricity is off or on is a different story, but I think that’s an interesting observation and may be a bright spot in the dark,” Collocott said.
More stories like this are available on bloomberg.com
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