Ordinary consumers must take the pain, says industry
IT is time for ordinary South Africans to make sacrifices to keep the country’s lights on rather than demanding that big business do with less electricity.
This harsh advice was offered to Eskom this week by Shaun Nel, executive of the Energy Intensive User Group, whose members include Anglo American, Xstrata and BHP Billiton.
Nel’s comments came as Eskom announced that the deadlines for its new Medupi power station had suffered a huge setback that would leave South Africa with a 700MW gap in supply.
Nel said industry had been suffering from a shortage of electricity supply for the past four years and had been forced to cut its usage, with smelters closing down on a regular basis.
Almost 50% of all small aluminium foundries had been shut down during the past year.
Medupi is the largest construction project in the southern hemisphere with 38 contractors and 300 subcontractors, but it has been running at an idle pace for months owing to labour unrest, contractor troubles and technical difficulties.
Productivity at the site is a mere 20%, but Eskom hopes that a part-
There will have to be a strong push to get savings from households
nering agreement between the stakeholders, as well as holding contractors to their performance bonds, will get the project back on track.
Eskom CEO Brian Dames assured South Africans that there would be no blackouts because of Medupi delays.
“We have not had any load-shedding since April 2008 and we have been able to keep the lights on despite a tough year in which we had to do maintenance over the winter period,” he said.
But Eskom has frequently interrupted supply to BHP Billiton smelters during the evening peak hours to keep the lights on.
“I’m surprised at Brian’s comment that there has been no loadshedding,” said Nel.
“Industry has effectively been load-shedded since 2008, if you take into account the smelters selling power back to Eskom and big users operating at 10% or more below baseline.
“The delay in Medupi will just mean more of the same. The reality is that industry and the mining sector will continue to suffer, while Eskom’s biggest challenge is to manage the peak demand between 5pm and 8pm, driven by residential customers.
“There will have to be a strong push from Eskom to get savings from residential customers to lower peak demand.”
During its latest financial year, Eskom’s electricity sales to industry contracted by 2.3%, and residential and municipal sales were up despite a strong drive by the utility to curb household demand.
In the past year, industry used 23.8% of available electricity supply, and residential consumption and that of municipalities amounted to 47% of the utility’s sales.
The limited availability of electricity to industry is costing South Africa billions, according to Stanlib chief economist Kevin Lings, affecting its growth rate, which is now at a mere 0.9%.
Nel said none of his group’s members were planning new or expansionary investment in beneficiation projects because of power shortages.
Last month, manganese mining company Assmang said it planned to start construction of a R3-billion smelter in Malaysia in the first quarter of 2014, using imported manganese ore from the Northern Cape as feedstock.
Even if Medupi’s first boiler started producing power as expected in the first half of 2014, it would make “no difference at all” to the country’s power problems, Nel said. “We need both Medupi and Kusile on line to give South Africa some breathing space.”