Cape Town - The Cape Chamber of Commerce has warned the country could be heading for a recession if the rolling blackouts continue.
These sentiments are shared by author James-Brent Styan, who wrote the book Blackout: The Eskom Crisis (2015).
However, some economists hold a different opinion, saying it’s too early to even mention the word “recession”.
Styan, in his book, said the country ran into losses of R300billion and a million lost job opportunities since the rolling blackouts in 2014.
He based his figures on data released by well-known economist, Dawie Roodt, director of Efficient Group.
Styan said we can expect serious job losses and further disinvestment due to the continued and possibly long-term energy uncertainty ravaging the country.
“No matter the precise numbers - precise numbers are impossible because of so many variables. For example, how much is lost due to the businessman’s decision to not open a new shop? Or the worker who has to do nothing for two hours. Or the factory that has to make fewer products because of less power? It’s very difficult,” said Styan.
According to Styan, Eskom is technically insolvent and will in all likelihood report a loss of around R30bn in the financial year to end March 2019.
“They’ve burnt about R6bn of diesel in the past six months to try and prevent load shedding. So the outlook is very dark,” said Styan.
Cape Chamber of Commerce president, Geoff Jacobs, said the figures were staggering. “We must ask ourselves how many factories were not built, how many mines were not developed, how many other projects were cancelled because Eskom could not supply the electricity or that the electricity it could supply was too expensive and unreliable to make the projects viable?” Jacobs said.
He said there was now also some concern about the loss of jobs in coal mines. According to Jacobs, part of the problem is that small businesses cannot afford the back-up power supplies.
“Worst hit are businesses which have to run machines and that is where many skilled and unskilled people work.
“When workshops are out of action for a half day at a time, jobs are in danger,” he said.
Jacobs said many businesses from which the chamber had feedback, were taking stock of the situation, and examining alternatives but diesel generators produce expensive electricity and are not suitable for regular use.
There are also noise and pollution problems and a shortage of diesel fuel is a possibility.
“Solar panels are a possibility but they cannot be used if they are tied to the grid as is the case with most installations.
“Only off-grid solar will provide back-up during periods of load shedding, but these systems need expensive batteries and are beyond the reach of most businesses.
“Our advice to every business is to examine every possible way of cutting down on their electricity consumption.
“Use more efficient lighting and gas where possible. All these savings add up.
“Eskom has not been forthcoming with information, especially on matters like their coal supply and what they are paying for coal. Eskom is now taking delivery of 5100 truckloads of coal a day and each ton that arrives by road costs about R150 a ton more than coal from the mines. How long will the roads hold out?” Said Jacobs.
Jacobs said, Eskom has been cutting back on maintenance spending for many years and “the chickens are now coming home to roost”.
“Generating plants are breaking down because they have been run too hard for too long.
“There is a shortage of the kind of skills needed to repair them quickly.
“Repairs take a long time because boilers, where most of the problems are found, have to cool down before they can be touched.
“Most of the knowledge in the public domain is about Eskom’s finances.
“What don’t we know about their technical problems?
“Recent Eskom boards have been sadly short of technical experience.
“Does the Eskom board and management understand the full depth of the problem?” he concluded.
However, economist at Efficient Group, Francois Stofberg, disagrees with the chamber and Styan, saying much more “upheaval” is needed before we can even talk about a recession.
“If the blackouts persist, we may be heading for a recession but our current growth trajectory is 1%,” said Stofberg.
Meanwhile, President Cyril Ramaphosa appealed to all South Africans not to panic over Eskom.
“We are addressing the Eskom issue every day.
“I’m saying to the whole nation let’s not panic, let us join hands, close ranks and work together,” Ramaphosa said.