Crisis-prone South Africa is wobbling towards a major one over the festive season as load shedding threatens to put a damper on Christmas cheer.
Professor Raymond Parsons from the North West University Business School said renewed load shedding is bad news for the economy.
“At the very time when the country wants to boost investor confidence, a fresh element of uncertainty has been injected into business decision-making. Prolonged load shedding will not only negatively impact on investor sentiment, but is also particularly damaging to vulnerable small businesses.
“It could also lead to job losses at a time when there is widespread concern about present levels of unemployment and low levels of economic growth.” Parsons said in the short term the private sector and consumers can make contingency plans to offset the worst effects of load shedding.
“But security of power supply remains an essential factor for sustained business and consumer confidence. If the Eskom supply emergency cannot be resolved soon, an urgent top-level meeting between the government and business will be necessary to see what other mitigating policies and measures can be implemented.”
According to Eskom, Stage 2 load shedding calls for 2000 megawatts to be rotationally load shed nationally at a given period.
“Load shedding is conducted rotationally as a last resort to protect the power system from a total collapse or blackout,” the power utility said.
Energy expert Ted Blom said Eskom is run like a Ponzi scheme.
“In 2007, they were warned of coal shortages and that new coal mines needed to be built. They need to commission about 20 new coal mines and so far they have done nothing.
“They have milked consumers. The only solution they see to a problem is to raise the cost of electricity.”
He said independent power producers are chipping in, but the sole responsibility remains with Eskom.
“After 4pm, independent power producers can’t do much because the sun has gone down. The wind can provide some relief, but then everyone is at the mercy of Eskom.”
Cape Chamber president Janine Myburgh said what business needs is certainty of supply and if Eskom cannot provide that, businesses will start to make their own arrangements.
“This means they will turn to rooftop solar and that will undermine Eskom’s future customer base.
“Load shedding also means that Eskom will sell less electricity and that will mean less revenue to pay the interest on its huge debts. The main problem for business is that load shedding introduces new uncertainties. We don’t know how long load shedding will last. It is becoming clearer every day that Eskom is in bad shape and it is increasingly difficult to have confidence in the organisation, which is surely headed for major structural changes, if not downsizing.”
Outa portfolio manager for Energy Ronald Chauke said Eskom’s woes were due to challenges embedded in its business model.
“The utility is unable to meet electricity demand during weekends and is back to load shedding. Political meddling at Eskom has basically rendered it a hopeless strategic asset.”
Chauke also said Eskom wants to fix structural problems by throwing money at them rather than fixing the root causes.