Eskom’s irregular and unpredictable power supply has cost the country an estimated R300 billion per annum since 2008, according to economists. South Africa’s industry has lost around R300 billion per annum in production since Eskom first started having problems in 2008. That’s according to Dawie Roodt, director and chief economist of Efficient Group, who told FTW that the request by the parastatal last week for industry to cut its power usage by 10% was “utter rubbish”. “Who is Eskom to tell business to cut their power usage? And what is the 10% based on? Nothing!” he said. Roodt pointed out that latest StatsSA gross domestic product (GDP) figures – released last week – showed that manufacturing was two thirds in negative balance and mining was in a recession. “This can certainly be attributed to an irregular and unpredictable power supply,” he said, adding that foreign investment would be further jeopardised by uncertainly and the loss of productivity. CEO of the Steel and Engineering Industries Federation of South Africa (Seifsa), Kaizer Nyatsumba, said: “On average, energy costs in the metals and engineering sector account for about 8% of intermediary input costs. It stands to reason, therefore, that without reliable energy supply, the sector cannot exist or expand.” He told FTW that economic growth in the South African economy had fallen substantially below its potential, adding that energy provision should support the country’s growth ambitions, but that there appeared to be “a real danger of the two gradually drifting apart”. He said electricity generation had become a “significant” constraint to SA’s growth. “It can be argued that this is contrary to government’s stated intention to stimulate local manufacturing and value-addition. Reliable energy supply is vital to this objective.” Nyatsumba said the country needed to tackle this challenge with a single-minded determination as though it were going to war. “In 2025 a large proportion of current generation capacity will reach the end of its life. Without electricity it is not possible for South Africa to be globally competitive.” Roodt’s short-term solution to the energy crisis is to increase prices and have a better balance of supply and demand. “This then leaves it to business and individuals to choose how much power they use.” CEO of Ford Motor Company and vice president of the National Association of Automobile Manufacturers South Africa (Naamsa), Jeff Nemeth, noted that during periods of stress on the electrical system, Ford had processes in place where it could shut down non-critical parts of the plant. “However, the production line cannot be stopped.” He added that South Africa’s renewable energy industry was being developed and the company was looking at ways to tap into that source. “We are constantly looking at ways to be globally competitive, especially when exporting to 150 countries worldwide. We therefore need a competitive product at a competitive cost level – and that requires reliable power.” Eskom ‘s interim financial results for the period ended 30 September, paint a bleak picture for the stateowned company’s liquidity. CEO Tsholofelo Matona warned that the company’s bleak financial situation, coupled with the operational problems resulting in recent power cuts, meant Eskom had “a crisis on our hands”. INSERT & CAPTION Who is Eskom to tell business to cut their power usage? – Dawie Roodt
