/ 30 March 2006

Mbeki: Blackouts won’t derail investment

The South African government does not expect the recent power blackouts experienced in the Western Cape to either derail economic growth or impact adversely on investment in the country, according to President Thabo Mbeki.

In reply to written questions in the National Assembly on Thursday, Mbeki said the power failures would not derail the gross domestic product growth target of an average of 6% between 2010 and 2014, as contained in the Accelerated and Shared Growth Initiative of South Africa.

“Business confidence remains high in the country in general, including in the Western Cape,” he said. “The faster-than-expected economic growth has required that we accelerate our build-plan, but it is expected that Eskom’s capital expenditure of R84-billion will have a massive positive impact on the economy and should sustain and drive a 6% growth rate.”

He said the government had “no evidence” of an adverse impact on investment stemming from the power failures. Major users of electricity approached Eskom well in advance in order to secure their supply, and therefore the government would be aware if there had been shortfalls in the needs of any large users of power.

Finally, Mbeki skirted the question of whether the government had set aside any funds to compensate businesses for their losses resulting from the power failures. He noted that it was “imperative” for businesses to insure themselves for national disasters such as these.

“We trust that the insurance industry will provide the affected with appropriate compensation,” the president replied. “Premier [Ebrahim] Rasool is coordinating all the relevant stakeholders in the Western Cape with the full cooperation of Eskom and the Minister of Public Enterprises [Alec Erwin] to look at issues relating to this matter.”

Meanwhile, in answer to a separate set of questions, Mbeki said the government would not set up an independent commission of enquiry to establish the causes of the government’s “failure to meet South Africa’s national electricity capacity needs”.

The president denied the assertion that the government had failed to meet the country’s power needs, noting that the national position was the availability of about 37 000MW with an additional 2 000MW available to manage very high peaks. The projected demand was some 35 000MW.

“The situation is somewhat tighter than we would have preferred,” Mbeki acknowledged, “this being the result of the higher-than-projected rates of growth. However, the Eskom build plan is already addressing this situation.

“Approved projects, including those under construction, will add another 7 260MW in the next few years. Projects in the planning process will provide a further 10 382MW.”

He added that the Parliamentary procedures already used — including the briefing by Erwin and others to a joint meeting of relevant portfolio committees — had dealt with the matter of the shortfalls comprehensively, providing adequate means for MPs to obtain information.

“Accordingly, I do not believe that the appointment of a commission of enquiry will serve any useful purpose,” he concluded. — I-Net Bridge