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Cape Town - Certainty over power supply is key to ensuring South Africa achieves optimal economic activity, the SA Chamber of Commerce and Industry (Sacci) said on Monday.
READ: SA heading for serious trouble – energy expert
"South Africa is now emerging from significant economic pressures following the protracted industrial action in the mining and manufacturing sectors," Sacci CEO Neren Rau said in a statement.
The disaster at the Majuba Power Station should be seen in the context of the increasing unreliability of the whole fleet of Eskom power stations, said the Cape Chamber of Commerce and Industry (CCCI) on Monday.
“The collapse of the coal silo at Majuba is just the latest in a series of mishaps,” said CCCI president Janine Myburgh.
Considering that the power issues are not new, a more aggressive approach to finding a solution would have been appropriate, said the Durban Chamber of Commerce and Industry (DCCI).
“While one appreciates that unexpected circumstances might put the grid under strain, it is unfortunate that the country has been slow to engage the use of alternative and independent power producers,” said DCCI president Andrew Layman on Monday.
READ: Breather for SA electricity consumers
Business at its peak
Businesses in the mining and manufacturing sectors needed to use the remainder of the year to recoup lost production, said Sacci.
"In the retail sector and in the tourism sector, the majority of businesses depend on festive season sales to tide them over during slower periods in the first quarter of the year," Rau said.
Businesses thus needed certainty about power outages, so they could plan around them. He said the success of a response to the current power crisis depended on transparency in the relationship between Eskom and its users.
The last straw
“It may have been the last straw, but the camel was already on its knees when that straw was added, for Eskom has already lost the equivalent of a whole power station through breakdowns,” said Myburgh.
Over the last decade the generating capacity of existing power stations has gradually declined from 90% to 85% and, according to Professor Anton Eberhard, over the last three years it has fallen to 75%.
And then came Majuba.
According to CCCI, Eskom has admitted that 32 of its 87 coal-fired generation units need major surgery and three are in a critical condition.
Competitive advantage has gone
“The problem is Eskom management and maintenance,” said Peter Haylett, chairman of CCCI’s industrial focus portfolio committee.
“A good fleet of power stations has been allowed to deteriorate to the point where the whole electricity supply is unreliable and the new power stations are far behind the schedule and way over budget,” he said. “That doesn’t just happen. Eskom management has let it happen.”
He said that long-term deals to buy nuclear power stations were of little use. “The problem must be dealt with as a matter of urgency. It might make more sense to talk to the Russians about maintenance and coal silos than nuclear power stations.”
READ: Eskom blackout catches SA offguard
The inevitable result, said Haylett, was that many industries would start making plans to generate some of their own electricity and that would impact on future electricity sales and Eskom revenue.
“The bottom line is that South Africa has lost the competitive advantage that came from a once abundant supply of cheap electricity,” Haylett said. “A legacy of cheap electricity has been destroyed.”
“The previous CEO was proud to have kept the lights on, and was rewarded accordingly, but the cost is now becoming apparent,” said Haylett.
Business comes to a halt
While many consumers are inconvenienced by load-shedding, it is devastating for businesses, said Layman.
“Even despite the existence of a schedule, which enables planning to be done, the reliance on electricity means that business comes to a halt during the outage periods,” he said.
“Over time and when outages are going to occur pretty regularly, the loss of productivity adds up to a significant amount,” he said. “This can’t be quantified unfortunately, but it is extremely damaging to the economy generally.”
“The outages are of particular concern to industrial processes,” he said. “Start-ups after shut down sometimes take time, and if processes are interrupted midstream by power cuts, there can be a loss of money relating to raw materials, which have already been committed to the production cycle.”
“While one appreciates that unexpected circumstances might put the grid under strain, it is unfortunate that the country has been slow to engage the use of alternative and independent power producers,” he said.
“As I understand it, there have been wrangles over what the IPPs [Independent Power Producers] would be paid, and the protocols which give access to the national grid.”
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