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Power cuts affecting business sector: SACCI

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The instability of the country’s electricity supply, coupled with the enforcement of rolling blackouts is likely to pose a significant risk to the economy, according to the South African Chamber of Commerce (SACCI). Since the collapse of a power silo at the Eskom’s Majuba power station in early November, South Africans have been subjected to regularly enforced load shedding.

With the power system still constrained, and with supply demand expected to rise during the busy festive season, businesses are likely to be hit hard by the energy crisis in the coming weeks. This will potentially have a knock-on affect for employees, with job losses a seeming inevitability.

According to SACCI CEO, Neren Rau, it would be difficult to estimate the extent of job cuts, as a number of companies had shown resilience to this point. Despite doing their best to find a way around the electricity challenge, businesses were likely to become vulnerable during the festive season period. Apart from the retail industry, the power cuts were also adversely affecting those in the services and tourism sectors.

“Beyond that we also see manufacturing under pressure, we see mining under pressure, and the extent of load shedding has been such that all businesses have been impacted across the economy,” he explained.

Despite the resilience shown by businesses, he was concerned about their ongoing ability to work around the challenge. Furthermore, he said their sustainability would be heavily dependent on the level and clarity of communication that came from those enforcing the power cuts.

“You find that sometimes Eskom sends out a particular national message, but the message at municipal level is not consistent with that. Or you can have a load-shedding schedule that Eskom publishes, and you find a different schedule at municipal level,” he said.

He noted that many companies had already sent out notifications of possible job cuts that could occur during the New Year. Whilst not the sole reason, he was adamant the crisis was amongst several factors that were leading to the cuts.

The fact that big companies and local corporations have been urged to cut down on their electricity usage, will also not bode well for South Africa’s economy. With big businesses already having to contend with several other crippling economic events, Rau said the electricity crisis would impact these companies, as well as the economy as a whole in a substantial way.

“We are finding a slowdown in many of our global markets, and we still find ourselves faced with a logistical challenge in terms of moving our goods. All of these are impacting business, but load shedding stands head and shoulders above the other risks,” he said.

The crisis was in turn lessening the attractiveness of South African companies towards foreign investors, driving away investment into the country.

Whilst Eskom has been solely vilified and blamed for the power shortage, Rau suggested the lack of other electricity sources, and lack of an open market was also to blame. As such, SACCI would seek to host an electricity summit alongside government in the New Year, with the goal of exploring alternative energy sources.

“Let’s open up the playing field. Let’s look at what the world has to offer us in terms of opportunities to respond to this crisis, and get our electricity supply back to where it needs to be,” he said. VOC (Mubeen Banderker)

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