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Small businesses and SA take a hammering as Eskom power cuts bite

Traffic lights out in parts of Johannesburg. Picture,Karen Sandison, ANA.

Traffic lights out in parts of Johannesburg. Picture,Karen Sandison, ANA.

Published Jun 30, 2022

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In spite of Eskom reducing its rotational power cuts from stage 6, small businesses in South Africa may struggle to survive this latest bout of power cuts as the economy already flounders.

The struggling power utility yesterday said it would implement stage 4 load shedding from 5am until midnight tonight as it continued to fail to return some generators to service.

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Eskom this week plunged the country into prolonged darkness, leaving businesses gasping for survival, due to multiple breakdowns at coal-fired power plants and also the unlawful and unprotected labour action.

Thousands of Eskom workers have downed tools for more than a week at nine of its power stations and other operating facilities following a deadlock in wage negotiations on June 22.

The workers are demanding wage increases of up to 12 percent while Eskom is offering a below-inflation wage hike of 4.7 percent.

Eskom spokesperson Sikonathi Mantshantsha said this has compelled Eskom to continue taking precautionary measures to conserve emergency generation capacity and safeguard plant from damage.

“While some workers have started reporting for duty at the power stations, there is still a high level of absenteeism. As a result of the unlawful strike, routine maintenance work has had to be postponed,” Mantshantsha said.

“This backlog will take days to weeks to clear. It is therefore important to note that the system will remain constrained and vulnerable to additional breakdowns while recovery activities are in progress.”

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Stage 6 load shedding means that Eskom will remove 6 000MW from the national grid, resulting in three rotational power cuts of two hours each per day.

Engine for job creation in SA to suffer

Small businesses and informal traders, which are the engine for job creation in South Africa, will struggle to cope with the hardship brought about by severe power cuts.

Energy economist Lungile Mashele said continued Stage 6 load shedding would be the death knell for many industries due to production lost to downtime.

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“Electricity is the bedrock of many industries, so 6 hours without electricity during the day will affect butcheries, schools who rely on e-learning, manufacturing, food processing, agriculture etc. Small businesses will not survive extended bouts of load shedding,” Mashele said.

“South Africa is not creating new jobs or industries. There can be no industrialisation drive without electricity. Eskom and the government through their inaction on the electricity crisis have confined entire generations to energy and economic poverty.

“In the years since load shedding started, South Africa has slipped to the third highest gross domestic product in Africa,” he said.

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Mashele said the government could through the small business department introduce a generator programme whereby qualifying small businesses would get a generator and a small diesel allocation.

“This will allow small businesses to continue operating, but also remain competitive and hopefully pass on this saving to consumers,” he said.

Jeff Schultz, a senior economist at BNP Paribas South Africa, said the industrial action at Eskom could have dire consequences for the economy beyond power supply challenges.

“We had warned over the threat of damaging industrial action this year in an environment of spiking inflation eating into consumer disposable incomes alongside still pressurised socio-economic conditions

“The Eskom wage settlement saga is reflective of these pressures and will undoubtedly be watched closely by policymakers, we believe,” Schultz said.

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