Economy / 7 March 2014, 09:42am / Londiwe Buthelezi, Nompumelelo Magwaza, Bloomberg and Sapa
Johannesburg - Eskom pulled the plug on the economy yesterday as it declared an emergency, claiming that continuous heavy rains had left its coal stocks sodden. Rolling cuts to the electricity supply, the first in six years, shut shops, restaurants and factories in major cities across the country, and delayed flights at Johannesburg’s OR Tambo International Airport.
Last night the crisis spread to Botswana as Eskom cut 35 megawatts of the 300MW it supplies along with warnings that it could cut the exports completely, depending on the situation in South Africa.
Scheduled electricity cuts started at 8am in the suburbs of Cape Town, Johannesburg and Pretoria, and were expected to last until 9pm as Eskom – which uses coal for 80 percent of its generation – warned at 6am that a combination of wet coal, the loss of three generating units at Kendal in Mpumalanga and reduced imports from Zimbabwe meant all users had to reduce consumption by 20 percent.
By 8am after all reserves were employed and key industrial users had made cutbacks, as they have been doing regularly in recent weeks, the utility still needed a demand reduction of 3 000MW as a “last resort” to avert a total countrywide blackout.
Public Enterprises Minister Malusi Gigaba and Eskom said the emergency would continue past the evening peak and although the Kendal units would be back in service today, along with another at Majuba, it was uncertain whether the blackouts would continue.
Water and Environmental Affairs Minister Edna Molewa, briefing journalists on behalf of the cabinet, tried to put a positive gloss on the crisis, saying: “It is as temporary as temporary can be. Once we get back to normality of drier weather this problem will be over.
“For now we haven’t received any information that says there’s any negative impact that will be realised.”
Meanwhile, local business leaders were counting the cost and Peter Attard Montalto, an economist at Nomura in London, said the outages might cut gross domestic product by about 0.2 percent a day.
Neren Rau, the chief executive of the SA Chamber of Commerce and Industry, said: “If we are looking at power constraints of about a day or two, then our losses would in the lower billions, but if you’re looking at… a week or more, it’s going to escalate very fast.”
Sandile Zungu, the general secretary of the Black Business Council, said the unreliability of power supply would severely compromise the confidence of business in the state’s capacity. “This will dampen our hopes for accelerated industrial capacity expansion as the private sector begins to take a cautious investment approach.”
At the V&A Waterfront in Cape Town, the country’s most-visited tourist attraction, the mall was dark, with most retailers and restaurants empty.
OR Tambo airport relied on back-up power generators between 9am and 11am, causing flight delays that were cleared up by 2pm, Unathi Batyashe-Fillis, a spokeswoman for Airports Company SA, said.
Mike Rossouw, the chairman of the Energy Intensive User Group (EIUG), said: “For companies who were running at full production this morning, their output was immediately reduced by 20 percent. The likelihood of recovering that 20 percent is very small.”
Members of the EIUG consume about 44 percent of the country’s electrical energy
ArcelorMittal South Africa said it was too early to quantify the impact of load-shedding on output at its smelters.
All other mining companies said they had heeded the call to reduce usage by 20 percent.
Econometrix chief economist Azar Jammine said people were reading too much into the implementation of load shedding, as this was the first time under outgoing Eskom chief executive Brian Dames, who leaves in just over three weeks.
Jammine said the roll-out of load shedding just before his exit would make people realise that Dames had a hard time trying to work independently from government decisions.