Load shedding could cripple businesses already facing Covid-19 losses

Published Jul 10, 2020


Cape Town - The possibility of load shedding could be the final straw that will break the back of businesses already struggling under the lockdown because of the Covid-19 pandemic, according to

business leaders and economists.

Eskom announced on Thursday that after a tripped unit at Medupi Power Station was restored to operation, one unit at Tutuka Power Station was yet to be restored as another unit at the same station went down. A third

generation unit also tripped at Kendal Power Station.

“Any additional breakdowns will compromise Eskom’s ability to supply the country through the peak demand period of 17:00 - 21:00. This constrained supply situation may persist through the weekend,” said Eskom.

The power utility said teams were hard at work trying to return these units to service.

MEC for Finance and Economic Opportunities David Maynier said: “Businesses in the Western Cape are already hard-hit by the Covid-19 pandemic and the resultant health and economic crisis.

" Add to this an electricity crisis, and this will certainly be the final blow for many businesses already on the precipice of closure, resulting in further job losses in the Western Cape.

"That is why we are doing everything we can to build energy resilience in the Western Cape and support businesses to beat load shedding.”

As lockdown regulations started easing gradually, more sectors of the economy started opening. However, many businesses have been closed for nearly four months getting almost little to no income.

According to Mayco member for economic opportunities and asset management, James Vos, the country’s economy could be at risk to lose up to R4 billion due to load shedding.

“The negative impact of load shedding on the economy in Cape Town cannot be understated. My mission is to find ways to make it easier to do business in Cape Town and I am deeply concerned about the impact of these rolling blackouts on SMMEs and larger companies especially in the food and beverage industry and manufacturing sectors,” said Vos.

He said load shedding could result in major job losses.

“When the power is cut, so are businesses sales. Likewise, when conveyor belts come to a halt at factories, so does production output causing massive financial losses. The electricity outages especially compromise the catalytic industries, and result in job losses,” he said

According to economist Dawie Roodt, the added strain of load shedding for businesses could land the country in a longer period of recession.

“We are in serious economic trouble. The demand for electricity was supposed to be lower during the lockdown.

"You have to look at this in the context of a business owner. If you are lucky to open your doors but can’t trade because of load shedding, it becomes a case of a double whammy for business owners,” he said.

Last month, Statistics SA announced the economy continued to contract in the first quarter of the year. The gross domestic product (GDP) has decreased by 2% in the first quarter of the year. This does not include post lockdown on the economy.

Cape Chamber of Commerce president Geoff Jacos said: “Any failure of electrical power will hurt business, the economy as a whole and ultimately employment. It’s an utter disgrace that Eskom has been allowed to degenerate to this extent, and even more appalling that people expect the power to fail every winter.

“Eskom cannot survive in its present form. The sooner it is broken up and sold to people who know how to run a business, the better for the country.”

Founder and chief executive of the National Small Business Chamber (NSBC) Mike Anderson said the small and medium-sized enterprises (SME) were under enormous strain as a result of the Covid-19 pandemic.

“With most SMEs coming back into play at level 2 and level 1, the impact of load shedding will elevate the crisis even further.

Currently more than 90% of SMEs are dealing with a cash flow crisis. Load shedding will prevent a significant more amount of SMEs from trading, which will result in increased business closures and job losses,” he said.


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Cape Argus

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