Power cuts to dampen business, consumer confidence as Eskom implements load shedding
JOHANNESBURG – South Africa woke up to news of more load shedding yesterday, with analysts warning a resurgence of power supply interruptions could derail South Africa’s economic recovery and stifle investments post Covid-19.
Eskom began implementing Stage 2 load shedding for 14 hours due to the delay to return to service of two generation units at Duvha and Tutuka power stations.
The utility said four more units at Kriel, Tutuka and Kendal experienced breakdowns and cut more than 2 000 megawatts (MW) of capacity from the system.
Anchor Capital’s Stephan Engelbrecht said the ongoing power cuts would cost the economy tens of billions of rand and dampen consumer and business confidence even further.
“We will only be able to get out of the load shedding cycle in 18 months or so,” Engelbrecht said. “I think Eskom's management are doing all they can with limited resources under (chief executive) Andre de Ruyter. Eskom, however, is a massive inhibitor of growth.”
On Wednesday, the Council for Scientific and Industrial Research said that Eskom could cost the economy up to R120 billion in the next two years if new generational capacity was not introduced to the grid.
Eskom said it was working hard to return as many of these generation units to service, but load shedding could go a stage higher if the breakdowns last longer than expected.
The utility said generating plants continued to perform at low levels of reliability, resulting in unplanned breakdowns.
It said the new wave of power cuts could persist into the weekend.
Old Mutual Wealth’s investment strategist Izak Odendaal said the new round of power cuts would hit those running continuous production, like the mines, hard. He said South Africa’s strict lockdown came at a cost, but electricity was a big constraint, especially to investors.
“The government needs to shift the negative narrative around Eskom and show the world that we are reforming the economy and we are ready for investment,” he said.
“Unfortunately, there are things that the government can do to alleviate this, one of which is to make it easy for companies to set up their own generation and remove any regulatory limits on how much power you can generate.” Odendaal also decried the fact that the emergency procurement had not got off the ground.
Mineral Resources and Energy Minister Gwede Mantashe said last month that the documentation for the procurement of 2 000MW of emergency power would be released to the market by the end of July or early August at the latest.
“We also need to allow for private participation in electricity generation. because that would send the right message that the government cannot solve these challenges alone as Eskom has been battling to resolve the electricity problems for decades,” Odendaal said.