South African businesses and households endured another crippling weekend after Eskom mounted a series of emergency power cuts to avert total collapse of the grid.
The latest power cuts have fuelled frustration and anger over what is increasingly becoming an insurmountable public relations nightmare both for the state-owned power utility and the government.
Eskom chief executive Tshediso Matona is scheduled to address a news conference this afternoon in Johannesburg, but there is little expectation that anything he says will reassure the country since Eskom continues to lurch from one crisis to another.
This past weekend marked a third consecutive weekend of rolling blackouts, the worst that the country has seen since March, when the power utility implemented the first wave of load shedding since 2008.
In recent days Eskom’s problems have been compounded by the exorbitant cost of running its gas turbines, which have been soaking up R2 billion a month as the power utility scrambles to plug gaps in its coal power generation capacity by using diesel.
On Thursday, Eskom said it had begun discussions with the Department of Public Enterprises and the Treasury to secure funding to boost its depleted diesel reserves.
Eskom’s blackouts had rattled business and consumer confidence at a time when businesses were hoping for a year-end holiday boost to their fortunes. Those counting the costs include retailers, small and medium enterprises, big industrial players, banks, shopping malls and food outlets.
The countrywide power outages were catastrophic for business, John Nicolakakis, the chief executive of Roman’s Pizza, said yesterday.
“In our part of business we do not run on gas. Some of our franchisees are putting on generators but that is very expensive and is an added cost. A big percentage of them have had to close down,” Nicolakakis said.
On the other hand, the power utility has been a boon for sellers of alternative power sources like diesel generators, gas cookers and solar panels.
A technician at a Johannesburg power company that supplies generators said the demand for generators that the firm sold had spiked three weeks ago when Eskom’s power cuts started.
Johan Muller, the programme manager for energy and power systems Africa at Frost & Sullivan, said Eskom was facing a perfect storm of challenges, with unplanned technical maintenance, diesel and other resource issues, against the backdrop of an unsustainable R2bn a month diesel expense and a rapidly ageing asset base.
“Eskom needs to seriously investigate its business case, and furthermore it needs to be investigated by an objective commission not afraid to identify the companies’ warts.”
The calls for the government to fix and stabilise Eskom are growing. Cosatu, the Cape Chamber of Commerce and Industry and Energy Intensive Users Group have already called for Eskom to be probed.
The National Clothing Retail Federation of SA urged Eskom to review its implementation of rotational load shedding over weekends.
“The effect is not only on federation members. Local manufacturers on whom federation members rely for a competitive edge, because of their ability to produce latest fashion quickly, are losing production time and materials through waste resulting from disruptions. Mall owners are having to contend with lower turnovers by tenants and reduced parking income,” said Michael Lawrence, the executive director of the federation.
“Delaying sharing of a turnaround plan for Eskom will cost South Africa dearly for years to come.”
Analysts have estimated the costs of Eskom’s problems to the economy at R300bn since 2008. Eskom’s woes are also undermining the country’s image as a reliable investment destination, analysts have said.
“Opting for power outages right through the peak shopping season will inevitably mean lower trading revenues, which in turn will translate into lower taxes paid to government and further constrain its ability to address priority needs in housing, health care and education,” Lawrence added.
Also in the retail sector, Neeran Naidoo, a spokesman for Woolworths, said each store had had a generator installed and could trade as normal despite load shedding.
But retailers do not trade in isolation, depending on general customer traffic, which took a severe knock as other stores had to close this weekend and customers got stuck in traffic snarl-ups.
Amid all this the state was silent about Eskom and its troubles. Mac Maharaj, the spokesman for President Jacob Zuma, referred all queries to Public Enterprises Minister Lynne Brown when asked if Zuma was being kept updated about the power crisis.
Looking ahead, Eskom spokesman Andrew Etzinger yesterday said the utility was cautiously optimistic there would be no blackouts until at least Wednesday. Even so, there are no guarantees.
On Wednesday, Brown would release the names of the new board of Eskom at a cabinet meeting, her spokesman Colin Cruywagen said yesterday. However, he said, Eskom’s crisis was not on the agenda.
The appointment of a new board follows a paralysis that has engulfed the current board amid the R43 million Eskom funding of The New Age breakfast briefings that were sanctioned by current board member Collin Matjila, when he was acting chief executive.
Matona, who took the reins as chief executive in September, will give an update on the state of the power system, following the recent spate of load shedding and also share a forecast for the festive season.
Eskom has asked its major customers to contribute by reducing their electricity usage by 10 percent and consumers to help alleviate pressure from the system by reducing their electricity usage.
In the background, Eskom faces the prospect of a further credit downgrade as details about the government’s plan to plug its funding gap remain hazy. On Friday, the rand slumped to a 11-month low as Eskom woes mounted. It hit R11.38 against the dollar.