1 / 22

Johann Fedderke & Zeljko Bogetic Infrastructure and Growth Workshop

FORECASTING INVESTMENT NEEDS IN SOUTH AFRICA’S ELECTRICITY AND TELECOMMUNICATIONS UNDER ALTERNATIVE GROWTH SCENARIOS. Johann Fedderke & Zeljko Bogetic Infrastructure and Growth Workshop Economic Research South Africa May 29-31, 2006 Cape Town, South Africa. OUTLINE OF THE PRESENTATION.

mei
Download Presentation

Johann Fedderke & Zeljko Bogetic Infrastructure and Growth Workshop

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. FORECASTING INVESTMENT NEEDS IN SOUTH AFRICA’S ELECTRICITY AND TELECOMMUNICATIONSUNDER ALTERNATIVE GROWTH SCENARIOS Johann Fedderke & Zeljko Bogetic Infrastructure and Growth Workshop Economic Research South Africa May 29-31, 2006 Cape Town, South Africa

  2. OUTLINE OF THE PRESENTATION PART I: • Why Worry About Infrastructure and Growth in SA? • Highlights of international Benchmarking of South Africa’s Infrastructure Performance for Electricity and Telecom PART II • Forecasting Demand for Infrastructure in South Africa: Electricity and Telecom • Investment Requirements in Electricity generation and Telecom Under Alternative Growth Scenarios

  3. PART I. Why Worry About Infrastructure and Growth in SA? • International Evidence • Evidence from South Africa • Decline in Infrastructure Investments in South Africa Since the 1970s • South Africa’s Growth Accelerating • ASGI-SA’s Emphasis on Infrastructure

  4. Figure 1: Infrastructure Accumulation and Growth (1960-97 country averages, percent) 6% G 4% 2% 0% Others -2% lac y = 0.4224x + 0.0007 2 eap7 R = 0.3487 -4% -2% 0% 2% 4% 6% 8% 10% 12% Growth in infrastructure stocks per worker International Evidence

  5. Evidence from South Africa • Aggregate time series growth model (Fedderke, Perkins, Luiz, 2005): • Output elasticity w.r.t. electricity: • 0.1 – 0.2 range under robustness checks • 0.5 once control for institutions (Property Rights)

  6. Decline in Infrastructure Investments in South Africa

  7. South Africa’s Growth Accelerating • In 2004-05, growth was 4.5 and 5% • In 1994-2003, it averaged 2.9% • Infrastructure Requirements of Accelerated Growth: Will Infrastructure Constrain Accelerated Growth? • ASGI-SA’s Emphasis on Infrastructure Scale Up • Planned infrastructure spending plan of ~R372-billion (about US$60 billion, or 24% of 2005 dollar GDP) over the next three years

  8. International Benchmarking of South Africa’s Infrastructure Performance • Bogetic and Fedderke (2005, 2006b) use an international research database (Eustache & Goicoehea, World Bank, 2005) to benchmark infrastructure pefrormance of SA in electricity, telecom, water and sanitation, and transport • Indicators: Access, Pricing/Affordability, Technical and Perceived Quality • Comparators: All world geographical groups and main income groups; Upper Middle-Income Group (Main benchmark for South Africa) • Conclusion: Despite impressive gains on the electrification front, SA still lags behind its benchmark income group on several indicators of performance

  9. Highlights of Benchmarking South Africa’s Infrastructure Performance:ELECTRICITY: ACCESS (% of population)

  10. Highlights of Benchmarking South Africa’s Infrastructure Performance:Electricity Transmission & distribution losses (% of total output)

  11. Highlights of Benchmarking South Africa’s Infrastructure Performance: TELECOM: TELEDENSITY(total telephone subscribers per 1,000 population)

  12. Highlights of Benchmarking South Africa’s Infrastructure Performance: TELECOM: PHONE FAULTS(Reported faults per 1,000 mainlines)

  13. PART II: Forecasting Demand for Electricity and Telecommunications • Earlier Studies by Fay (2001), Fay et al (2003), Heffley et al. (1996), Bogetic and Fedderke (2005, 2006a) • Estimation by Fay (2001) and Fay et al (2003): • (I/P) = F( Y/L , Ag/Y , Man/Y, Z )

  14. Underlying Estimation:

  15. Quantity Forecast:

  16. Cost Forecast Under Current Growth Scenario:

  17. Forecast under the “current growth scenario” (3.6% pa): 2005 - 2010

  18. Forecast under the ASGI-SA like, “accelerated growth scenario” (6% pa) until 2010

  19. CONCLUSION 1: • We estimated arobust model of demand for electricity and telecom using panel data on 52 countries for the period 1980-2002 • The model performs well in characterizing historical demand • We use the model to forecast future demand for electricity and telecom under two growth scenarios: “current” and “accelerated” growth, covering the range of likely growth scenarios for South Africa

  20. CONCLUSION 2:Significant new investments in electricity and telecom required • To support economic growth: • Under the current growth scenario: Rand 16 billion (3.5 billion in electricity generation and 13 billion in telephone mainlines) • Under the accelerated growth scenario: Rand 34 billion (6 in electricity generation and 28 in telephone mainlines) • In electricity, these investments may exceed those currently planned by ESKOM

  21. Further research needed: • Our paper establishes investment requirements of growth in electricity generation and telephony; it does not say anything how those requirements will be met (public vs private sector, financing options etc). Further useful research to assist the operationalization of ASFI-SA could focus on: • Policy assessments of alternative ownership, operating, efficiency, and financing scenarios

More Related