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Load-shedding predicted to cost sugar industry more than R700m

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South Africa’s sugar industry is set to lose more than R700m this year due to load-shedding.

This is according to data compiled by SA Canegrowers, which on Thursday appealed to Eskom and government to urgently put short-term measures in place to mitigate the impact of rolling blackouts on the industry.

“With milling giant Tongaat Hulett in business rescue, and the destructive health promotion levy (sugar tax) already hampering the industry, these losses are potentially catastrophic for growers and the industry’s workers,” said SA Canegrowers chair Andrew Russell.

He said load-shedding affects 1,135 irrigated growers who employ more than 10,000 workers.

An estimated 34% of South Africa’s sugar cane is produced in irrigated areas including Komatipoort and Malelane in Mpumalanga, and Pongola in KwaZulu-Natal.

“Growers are expected to incur more than R189m in additional energy costs in 2023 on account of the disruption to irrigation schedules.

“Most irrigated growers in KwaZulu-Natal and Mpumalanga operate on a Ruraflex system which allows them to pay a lower tariff for operating during low-demand times.

“But the converse also applies — growers pay a significantly higher rate for pumping during peak demand times. As a result of load-shedding, growers have been forced to irrigate whenever electricity is available, regardless of demand.”

Russell said growers also face yield losses as they have fewer hours of continuous energy supply.

“Growers need a minimum of six hours of continuous energy for proper irrigation. As a result of the intermittency of the power supply disrupting irrigation, irrigated growers will lose up to 40% water capacity.”

SA Canegrowers’ scenario modelling shows that continuous load-shedding at stages 4-6 will cost growers more than R723m in 2023.

“An escalation to stages 6-8 could cost the industry more than R1.8bn. Anything beyond stage 8 could cost the industry more than R2.4bn,” said Russell.

Some of the short-term measures SA Canegrowers has asked the government to consider include:

  • restricting load-shedding to stage 4 in irrigated cane growing areas during peak watering season;
  • diesel rebates for growers using generators; and
  • tax rebates for those investing in alternative energy sources.

“We will continue to engage with all industry stakeholders as we work to save the
1-million livelihoods the sugar industry supports.”

Source: TimesLive

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