The Economic Impact of Electricity Price Increases on ... - Eskom
The Economic Impact of Electricity Price Increases on ... - Eskom
The Economic Impact of Electricity Price Increases on ... - Eskom
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<str<strong>on</strong>g>The</str<strong>on</strong>g> c<strong>on</strong>structi<strong>on</strong> industry emerges c<strong>on</strong>sistently the industry with the<br />
lowest reliance <strong>on</strong> electricity. Firms in finance, insurance and banking<br />
and telecommunicati<strong>on</strong>s and media also have very limited direct<br />
exposure to electricity costs…<br />
Firm Sector <str<strong>on</strong>g>Electricity</str<strong>on</strong>g> costs as a<br />
% total costs<br />
Absa Banks 1.0%<br />
Metropolitan Life Assurance 1.1%<br />
Nedbank Banks 0.8%<br />
FirstRand Banks 0.8%<br />
ABIL General financials 0.7%<br />
Standard Bank Banks 0.7%<br />
Discovery Life Assurance 0.6%<br />
Liberty Life Assurance 0.6%<br />
Sanlam Life Assurance 0.2%<br />
Old Mutual Life Assurance 0.2%<br />
Source: Based <strong>on</strong> Deutsche Securities, 2010<br />
27<br />
Finance, insurance and banking industry<br />
electricity as a % <str<strong>on</strong>g>of</str<strong>on</strong>g> costs<br />
Deloitte<br />
Telecommunicati<strong>on</strong>s and media<br />
electricity as a % <str<strong>on</strong>g>of</str<strong>on</strong>g> costs<br />
Company Percent (%)<br />
Telkom 0.76<br />
Vodacom 0.43<br />
MTN 0.09<br />
Naspers Media 0.5%<br />
Source: Based <strong>on</strong> Deutsche Securities, 2010<br />
Source: Deutsche Securities, 2010<br />
Key Points<br />
Vulnerability <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
sectors to rising<br />
electricity prices<br />
• <str<strong>on</strong>g>The</str<strong>on</strong>g> c<strong>on</strong>structi<strong>on</strong> has very limited direct exposure to rising<br />
electricity prices but may be impacted indirectly through lower<br />
investment spending and lower demand for new c<strong>on</strong>structi<strong>on</strong>.<br />
• C<strong>on</strong>structi<strong>on</strong> companies in South Africa including WBHO,<br />
Murray and Roberts Holding, Group Five and the Aveng Group<br />
face direct electricity costs <str<strong>on</strong>g>of</str<strong>on</strong>g> between 0.25% and 0.3% <str<strong>on</strong>g>of</str<strong>on</strong>g> total<br />
costs.<br />
• Firms in the finance, insurance and banking sector are<br />
relatively resilient to electricity prices increases since electricity<br />
costs <strong>on</strong>ly account for between 0.2% and 1.1% their total<br />
operating costs .<br />
• That said, the pr<str<strong>on</strong>g>of</str<strong>on</strong>g>itability <str<strong>on</strong>g>of</str<strong>on</strong>g> firms in this sector could be<br />
negatively impacted by the sec<strong>on</strong>d-round impact <str<strong>on</strong>g>of</str<strong>on</strong>g> higher<br />
electricity prices.<br />
• Firms in the telecommunicati<strong>on</strong> and media sector also have<br />
very limited direct exposure to rising electricity prices, since the<br />
proporti<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g> electricity costs in total costs is between 0.1% and<br />
0.8%<br />
• Until this becomes a more material cost, there will probably<br />
little resp<strong>on</strong>se by media and telecommunicati<strong>on</strong>s firms to rising<br />
prices<br />
©2012 Deloitte Touche Tohmatsu Limited. All rights reserved.<br />
2