Week-long load shedding will cost SA 0.1% in growth - economist

2019-10-17 14:45 - Ana Monteiro and Liezel Hill

The cash-strapped Eskom imposed a second day of controlled blackouts, jeopardizing a recovery in the continent’s most-industrialized economy as investors await a government plan to restructure the utility.

The nation is still struggling from outages in the first quarter that contributed to the biggest economic contraction in a decade. Estimates of the blackouts’ toll range from R1bn to R5bn. They could also cost South Africa its last investment-grade credit rating from Moody’s Investors Service, which is due to deliver its next assessment on November 1.

Eskom, which provides about 95% of South Africa’s electricity and is seen as the biggest threat to the economy, cut 2,000 megawatts from the grid Thursday due to unplanned breakdowns at its plants, it said in a statement. The blackouts could last for a week, Eskom Chief Operating Officer Jan Oberholzer told Talk Radio 702.

Read: More load shedding for Thursday as Eskom scrambles to prevent total collapse of power system

If the current level of power cuts continue for that long, “that would give you about 0.1% of economic growth that would be lost,” Econometrix Chief Economist Azar Jammine said by phone.

“The damage that this is inflicting on the willingness to invest in the economy will be longer term.”