File Picture: David Ritchie/African News Agency/ANA.
File Picture: David Ritchie/African News Agency/ANA.

WATCH: Eskom's weak electricity generation weakening the economy

By Siphelele Dludla Time of article published Dec 8, 2019

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JOHANNESBURG - South  Africa could be in for a candle-lit Christmas after Eskom implementing stage 4 load shedding on Friday from stage 2 on Thursday, citing additional generating units trips.

Eskom said the interruptions would be conducted rotationally as a measure of last resort to protect the power system from a total collapse or blackout.

It said there was a probability of load shedding at short notice if unexpected shifts, such as additional unplanned breakdowns, were experienced.

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Video by: Chelsea Lotz, Business Report TV

“With the incessant rain, we are beginning to experiencing coal handling problems at a number of our power stations as a result of wet coal, which has contributed to additional load losses," Eskom said. "This could further impact supply as the rainy weather persists.”

In September Eskom warned that unplanned breakdowns needed to be contained below 9 500MW to avoid load shedding.

Eskom’s weak electricity production has negatively affected the economy as industries, businesses and households rely heavily on Eskom which supplies about 95 percent of the country’s electricity.

It also puts the economy on a collision course with the ratings agencies as Moody’s and S&P Global have both revised the outlook to negative, with a downgrade looming early next year.

The power utility's operational and financial troubles have seen government resolving to unbundle it into three unios - generation, transmission and distribution - to enable favourable terms with creditors as its more than R450 billion debt remains stubborn.

The country faces the risk of gross domestic product (GDP) growth below 0.5 percent this year due to a deterioration in the ease of business and low productivity persisting.

The load shedding contributed significantly to the country’s weak GDP contraction of 3.1 percent in the first quarter as businesses failed to get production going.
Statistics South Africa (Stats SA) on Thursday released electricity production data for October, showing a contraction of 1.9 percent year on year.

Electricity production for the year to date was down on average by negative 1.1 percent year on year as Eskom continued to institute load shedding on numerous occasions this year.

Stats SA said consumption fell by 2.1 percent in October, down by 1.5 percent on a year to date average basis.

Investec chief economist Annabel Bishop said this was indicative of the weakness in demand in the South African economy.

"The economy is growing at such a poor rate that it easily switches between contraction and expansion as it fluctuates around zero percent, and so traditionally large swings in the performance of the primary and secondary sectors influence the outcome significantly," Bishop said.

"The infrastructure builds tend to have cost substantially more than initially estimated, taken longer to deliver (often due to quality defects) and often not contributed to supply on the grid as initially scheduled.  Eskom has yet to see a turnaround, negatively impacting GDP in the interim."

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