Johannesburg - Eskom has been quite vocal in the past few days, letting the country know that it has been able to run for more than a month without resorting to power cuts, otherwise known as load shedding.
Yesterday, the utility once again put out a statement saying that it had been able to perform maintenance on its power stations without cuts for the last 18 days and counting.
It is good PR for Eskom, a company that is always in the news for bad reasons. But on Tuesday, Statistics SA gave us reasons why we should be more worried about Eskom’s claims.
With his latest figures on second-quarter gross domestic product (GDP), statistician-general Pali Lehohla confirmed what most people had suspected, that the country’s deepening economic woes could be summed up in one word: Eskom.
Interruptions in the electricity supply hammered key economic sectors, unsurprisingly, with the manufacturing sector contracting for a second consecutive quarter, while mining also took a hit. In essence, the data showed that as much as the warming temperatures had helped ease the pressure on the grid, the real reason why South Africa was enjoying the load shedding free ride could very well be because of the economic crisis that Eskom has unleashed in every industry.
Most intensive energy industries, such as mining and manufacturing, have cut back on production simply because the power cuts have left them with no choice but to rein in expansion. Industries cannot plot growth strategies amid an unpredictable power supply.
The Intensive Energy Users Group said yesterday that most industrial consumers had scaled down their operations because of the power cuts.
Spokesman Shaun Nel said the group could not plan its operations properly because the power cuts were in most instances unpredictable.
“What the power cuts have done has been to gradually (put the) more productive sectors of the economy out of business,” Nel said. “There has been very little clarity at all from the government as to what should be done to fix the problem and kick-start the economy again.”
But it is not only intensive users who have suffered the blow of power cuts. Labour and non-energy reliant sectors, such as agriculture, have also felt the interconnectedness of every industry to Eskom.
The figures said agricultural production output declined 17.4 percent, prompting a farmers’ organisation to point out that the power supply problems had a direct impact on agriculture as well.
Transvaal Agricultural Union of SA president Louis Meintjes warned that unless the government focused its attention on the economic problems it had direct control over, the situation would worsen, exacerbated by the drought that has gripped some provinces.
“Energy and financial resources should be utilised to ensure that in future Eskom will be able to meet demand,” Meintjes said. “This is a government responsibility and battered consumers should not to be punished with further rate increases.”
And the emerging markets economist at Nomura, Peter Attard Montalto, put it even more concisely: “The Eskom shock finally hit home and this is even as the China and terms-of-trade shocks are only starting to build. The current government narrative is that this is due to international forces; however, this ignores the fact (that) policy choices have left very weak foundations.”
On Sunday, President Jacob Zuma and Eskom boss Brian Molefe will officially open unit 6 at Medupi power station in Limpopo. The unit is expected to add almost 800 megawatts to the trouble-prone grid. But it is unlikely to help kick-start an economy that might well be in the middle of a recession. GDP data for this quarter may well confirm that later in the year.
BUSINESS REPORT