South Africa’s Economy Suffers Heavily Over Power Cuts


Persistent loading shedding has hard hit the South African economy, costing billions of rand every day, the opposition Democratic Alliance (DA) has said.

“Load shedding has significant consequences for our economy, and the productivity of small businesses in particular, which have suffered the biggest blows due to the blackouts,” the DA said on Sundayamid a worsening power crisis. For the past few days, state-run electricity utility Eskom, which provides more than 95 percent of the electricity consumed in South Africa, has implemented the most severe load shedding for years, plunging large parts of the country into darkness and disrupting economic activities.

South Africa loses at least 2 billions of rand (about 143 million U.S. dollars) a day due to power failures, according to the DA, citing estimates from economists. “It is safe to say that load shedding leads to job shedding,” DA Chief Whip John Steenhuisen said.

The DA has used load shedding to attack the ruling African National Congress (ANC) in its election manifesto in the run-up to the general elections, scheduled for May 8. “The ANC has killed the lights affecting 57 million South Africans. Time for us to take their power. Vote DA,” the party said in its election billboard. The fact that Eskom continues to leave our citizens in the dark is further proof that the failing ANC is completely incapable of fixing the challenges at the ailing utility, the DA claimed. In his reply to a debate on his State of the Nation Address (SONA) on Thursday, President Cyril Ramaphosa admitted that the government has not done enough to restructure poorly managed Eskom.

He has proposed to split the utility into three entities for generation, transmission and distribution respectively. His proposal has won the backing of the cabinet although trade unions are worried about the possibility of job cuts as result of the split. Ramaphosa’s proposal is seen by the DA as an attempt for Eskom to be unbundled into a holding company, with three separate business entities to be owned entirely by the holding company.

The DA argues that Eskom will remain a monopoly even after the utility is broken up in separate units. “This plan means that each of the three entities will have the same holding board. Thus, the intention to stimulate competition in the generation sector of Eskom will be limited by the fact that the entities are not wholly independent or competitive. They will continue to be state owned,” Steenhuisen said.

The DA wants to privatize Eskom in an effort to break Eskom’s monopoly, allowing independent power producers to compete on an equal footing in the generation sector. But Ramaphosa has rejected the proposal to privatize Eskom.

There are sound, valid and compelling reasons to separate Eskom into different entities, but it is not a path to privatization, the president said. High levels of debt and default risk have left Eskom in dire straits as the power utility battles to meet demand.

The utility is facing debts amounting to 420 billion rand (about 30 billion U.S. dollars). The Department of Public Enterprises (DPE) said earlier this week that Eskom would cease to exist at the current trajectory by April this year. In an attempt to end outages and help Eskom recover, the government reportedly has deployed police and intelligence officers at Eskom’s power stations for fear of sabotage. Eskom’s generating facilities have been sabotaged before by striking workers.

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