/ 21 January 2008

Dark times ahead for South Africa

South Africa was set on Monday to ration electricity in a bid to stem a spiralling crisis that has dealt a severe blow to its status as the continent’s economic powerhouse.

After mounting anger over daily power cuts that have cost business hundreds of millions of rands, the government said it was drawing up plans that could see consumers fined if they exceed set quotas.

Nelisiwe Makubane, Deputy Director General of the Department of Minerals and Energy, said the regulations being worked on with the state power utility Eskom could be implemented within three months.

”Once we have received public comments, then the regulator and Eskom will implement those regulations, which will include, among other things, incentives for people to move to power-rationing and also penalties to make sure that people stick to what they are committed to,” Makubane told public radio.

Her comments came after Eskom’s chief executive was quoted as saying that rationing was being considered and anyone who breached his or her quota could have their power disconnected.

South African President Thabo Mbeki held talks with Eskom’s management late on Sunday to discuss the crisis, which analysts warn will scare off foreign investors.

Although the power cuts have affected the whole country, the commercial capital, Johannesburg, has been worst hit and Eskom says it would be foolhardy to attract major industrial projects until the situation has been resolved by the middle of the next decade.

”It’s a question of supply and demand. It would be irresponsible now to aggressively pursue energy-intensive businesses,” Eskom’s finance director, Bongani Nqwababa, was quoted as saying by Business Day.

The power cuts have affected everything from factory production to traffic lights, with some estimates putting the overall cost so far at beyond R2-billion.

”This situation inevitably reduces the country’s global competitiveness as an investment destination, especially since it diminishes South Africa’s competitive advantage as a low-cost electricity country,” Business Unity South Africa’s (Busa) chief executive Jerry Vilakazi said.

Busa’s concerns are shared by the Congress of South African Trade Unions (Cosatu).

”It has become a serious national embarrassment and could have a major impact on economic growth and job creation,” said Cosatu spokesperson Patrick Craven.

The blame has been largely put on the government, with Mbeki acknowledging last month that Eskom’s appeals for investment several years back had been rejected.

Newspaper headlines have made uncomfortable reading, with the Times bemoaning ”Power Cuts Are a National Disgrace” while the Star — whose printing presses have been halted several times — proclaimed: ”Welcome to the Dark Ages.”

Hendrik Schmidt, a spokesperson for the main opposition Democratic Alliance (DA), said a shelving of major industrial projects would be a disaster.

”Such a moratorium could derail a number of huge projects, such as BHP Billiton’s expansion of two aluminium smelters in Richards Bay” in KwaZulu-Natal, he said.

”Our economy simply cannot afford to chase away investment of this size as it not only undermines our growth potential but also stymies the much-needed ability to create jobs.”

Even the ruling African National Congress is adding to the pressure, with its national executive committee recommending on the weekend that ”government urgently develop a national response plan, whose single-minded focus is to keep the electricity flowing”.

But amid the frustration, retailers of rechargeable lights, gas cylinders and generators have been enjoying a sales boom.

”They sell like hot cakes. We have nothing left in the store room, except what you see on the floor,” said McLaren Magwaza, a salesperson at Mica Hardware in Johannesburg.

Voluntary saving targets

Meanwhile, Eskom has requested that business cut its energy usage by 10% to 15%, the energy supplier said on Monday.

Speaking to reporters after meeting in Midrand with top business leaders about the energy crisis, Eskom CEO Jacob Maroga said ”the biggest lever we can pull is reducing demand and the discussion this morning [Monday] with the key customers is how we can collaborate in reducing demand”.

Maroga said ”voluntary saving targets” had been discussed with the 131 executives representing 38 companies present at the meeting.

He said Eskom had been talking with business about voluntarily reductions for some time.

”In some cases we’ve had some support where they’ve voluntarily reduced where they can.”

He said: ”We’ve put to them that where it’s possible they can help us in reducing voluntarily.

”The quantum we are looking at is between 10% to 15%.”

Maroga said he would aspire to a 20 % reduction, ”but anything between 10% and 15% is something we need to aspire to in terms of reduction.”

Maroga also said Eskom and key business leaders had set up a task team on Monday.

The task team represented sectoral interests such as the Chamber of Mines and municipalities.

Maroga said the team would meet ”very, very shortly to come up with concrete solutions of how we can move forward”.

He said Eskom was ”accelerating” the implementation of plans for core generation of energy with some of its industrial customers, whereby their waste heat would be turned into electricity.

Meanwhile, there was a high possibility of power cuts countrywide until Thursday, Eskom warned.

In a statement on Monday the utility asked consumers to use electricity sparingly.

Skills shortage

A skills shortage at Eskom is ”severely undermining” the utility’s ability to keep its power stations running, the DA said on Monday.

”While everybody is well aware there is a generation capacity problem at Eskom, [its] ability to fully utilise what … capacity is available is being severely undermined as a result of staff capacity problems,” DA public enterprises spokesperson Manie van Dyk said in a statement.

Eskom had, at various times, protested against allegations that its staffing policies had contributed to the electricity crunch South Africa was currently experiencing.

However, there were reports of various units at power stations — such as Majuba — being out of commission for substantial periods of time as a result of a shortage of maintenance staff.

As Eskom had failed to submit a detailed human resources oversight report to Parliament with its annual report, the DA would now be submitting a number of parliamentary questions on the utility’s staffing.

Van Dyk said South Africans were growing more and more angry over Eskom’s inept handling of the power crisis.

”It is a travesty that the power utility is only admitting to its problems now that the damage has already been done,” he said. — AFP, Sapa