The volume of electricity produced fell by 5.3 percent year on year (y/y) in May 2012‚ Statistics SA said on Thursday.

This meant that the production of electricity has plunged by a seasonally adjusted annualised 12.7 percent in the three months ended May compared with the prior three months.

State-utility Eskom‚ which produces more than 95 percent of the electricity in SA‚ has been battling years of under-investment‚ despite warning the government back in 1998 that it would need to have new base-load power stations by 2008 at the latest. In January 2008‚ a combination of events resulted in SA facing load shedding and many new investments‚ even something as mundane as a shopping centre‚ have been delayed or halted because no new electricity generation capacity has been available.

The new deep-water port of Ngqura near Port Elizabeth for instance was to a certain extent premised on the basis that a new aluminium smelter‚ similar to BHP Billiton’s Hillside smelter at Richards Bay‚ would be built at Coega‚ the industrial hinterland zone for Ngqura.

The Coega smelter's environmental impact assessment study was completed in 2002‚ and Pechiney signed a long-term energy agreement with Eskom and a port usage and services agreement with South Africa's National Ports Authority.

Pechiney (taken over by Alcan‚ who in turn were taken over by Rio Tinto) had previously expected the Coega smelter to come on stream with aluminium output during 2006. However‚ the smelter never got the green light and Coega has still to find an anchor tenant of similar size more than a decade later.

Previous Pechiney plans indicated that at the peak of the construction of the Coega smelter‚ over 6‚000 people would be employed‚ while about 800 people would be employed permanently once the smelter was up and running.

The first generating unit of the new Medupi coal-fired base load power station will only come online towards the end of next year‚ which is why Eskom has asked consumers to cut consumption by 10 percent. At this stage‚ Eskom has no idea what new base load power station will be ready in 2020‚ a mere eight years away‚ because the government has yet to decide which fuel source the new base load station will use.

In January Eskom CEO Brian Dames ruled out the use of the abundant natural gas deposits in neighbouring countries‚ whose deposits may well dwarf those of the North Sea. At this stage Eskom would not consider building and operating a natural gas-fuelled power station as "Eskom would stick to its knitting‚" Dames said.

Article continues on page two: production in May 2012 was 4.7 percent down on the crisis month of January 2008...