POWER CUTS: TRADERS COUNT HEAVY LOSSES
SA loses R2bn each day in stage 4 cuts as small businesses close up shop
Eastern Cape business owners are wringing their hands over losses due to load-shedding. Court schedules are in chaos and people who use sensitive equipment are staring at smoking ruins that mean losses of millions.
Eskom cut electricity for a fourth straight day on Wednesday, as public enterprises minister Pravin Gordhan warned parliament the gutted utility needed a cash injection by April to survive.
Eskom, laden with more than R400bn debt, is battling a shortage of capacity that threatens to derail government plans to lift the already sluggish economy as businesses, large and small, feel the pain. President Cyril Ramaphosa said last week the state would support its balance sheet but left the details for finance minister Tito Mboweni to fill out in his budget speech on February 20.
Gordhan told MPs Eskom was technically insolvent and would “cease to exist” at the current trajectory by April without the bailout – but he ruled out privatisation.
Eskom is struggling due to coal shortages and poor maintenance, with 40% of breakdowns a result of human error.
It cut 3,000 megawatts (MW) from the national grid between 6am and 9pm on Wednesday. This follows a similar cut on Tuesday and 4,000 MW on Monday without notice in the worst power cuts seen in several years, pummelling the rand. It tumbled nearly 2.5% on Monday to its weakest in nearly three weeks but had firmed slightly by Wednesday.
Over one third of the utility’s 45,000 MW capacity was offline on Tuesday. Senior Eskom official Andrew Etzinger, told Reuters around 11,000 MW was offline because of plant-related problems, 5,000 MW due to planned maintenance and 2,000 MW was unavailable because of a shortage of diesel.
Etzinger said Eskom was treating unplanned outages at some power stations as technical breakdowns, despite speculation from analysts that disgruntled union members could have sabotaged some units.
“There’s no reason to believe it’s sabotage,” he said.
Border-Kei Chamber of Business chief executive Les Holbrook, described catastrophic losses for Eastern Cape businesses, large and small.
“Tenants are being driven to the wall. Trading hours are reduced, they have spoilt stock and many will be forced to invest in generators.”
Amatola District’s black business chamber Nafcoc spokesperson Zwelitsha Vava said hardest hit were the small companies. “My fast food outlet in Mthatha closes. Without power small businesses can’t trade. The state is letting us down.
“It shouts about job creation and entrepreneurs creating businesses but allows Eskom to kill us. Who is going to reimburse us for food we have to chuck away?”
O R Tambo chamber of commerce chair Vuyisile Ntlabati said: “After the outages in December, this latest one has already closed businesses and cost jobs. Small dealers cannot afford generators. It is killing commerce. How long does this go on? What happens to tourism over Easter?”
He said the sudden decision to go to stage 4 was suspicious. “Last week there was no hint of a problem. Suddenly come Monday and we have six generating points that are needing major maintenance?”
Vic Ross owns Farmhouse East London. His three warehouses carry a mixed range of frozen meats and chicken, valued at up to R15m at any one time. His freezing systems, he said, could handle a two-hour power cut as long as they remained shut, but not an extended period.
“We have just purchased a mobile generator for around a R1m. We can’t take the risk of long cuts. Unfortunately they are unnecessary purchases, were Eskom to run efficiently. It adds to costs of production, as does the diesel tanks to keep it running, and in the end customers suffer, as do we.”
East London’s iconic Shamrock Pies believes forewarned is forearmed. “We couldn’t afford to be caught mid-bake with a power outage, so the company invested in three large generators, which cover deep freezes, fridges and ovens,” said pie
production manager Bertie Cavanagh.
“The diesel adds significantly to the manufacturing costs.
“Eskom has made it all but impossible for smaller companies to run without alternative power,” Cavanagh added.
Angela Heathcote, who started the popular little Angela’s Coffee Shop in Beach Road a few years ago, felt the bite of stage 4 on Monday.
“I couldn’t bake to renew our fast-selling range of pies, which I normally bake in the morning, or other baked goods.
“I had to close for the day. One day is meaningful, it slashes my turnover by nearly 5%.
“Now my electric oven is up for sale and I will convert to gas. I should have done it a while ago, but this latest episode sounds as if will go on for a while.”
Commercial businesses, although not feeling the same strain as manufacturers, are also having productivity slumps.
Pam Golding Properties EL principal Sean Coetzee said administration tasks shut down for the Monday’s blackout.
“I have a generator at my legal company. I did not see it as a solution at PGP because we share premises, but I might have to re-think it if this continues. We can’t keep losing a few hours a day.” –