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Eskom load shedding will hurt economy and add to weakness - economist

Jun 17 2018 17:00
Carin Smith

Eskom's current load shedding due to the impact of protest action by workers will add to the weakness of the South African economy which is already battling, economist Mike Schüssler told Fin24 on Friday.

"Load shedding is unfortunate, because South Africa already has serious economic problems. Load shedding will take away consumer and business confidence as South Africans are already struggling to make ends meet," said Schüssler.

"Investors have pulled out of South Africa and continue to do so. South Africa has so many protest actions. It really hurts the economy."

He believes it will be harder for the local economy to catch up on whatever pace it loses now, due to the impact of load shedding. It would also make it harder for the country to avoid going into a recession.

"South Africa is sending out a message that we have severe interruptions in economic activity, and that we are not quite as open for business as we'd like to advertise," said Schüssler.

"We are creating a reputation of not implementing what we claim we will do. We say we will create a certain number of jobs and that we are open for business, but then Eskom implements load shedding."

When you operate "at the edge of the envelope" like Eskom has been doing, you are vulnerable to even the smallest thing pushing you over the edge - whether labour, coal or plant breakdown issues, energy analyst Ted Blom told Fin24 on Friday.

'Totally irresponsible and grossly negligent'

"If this is the way Eskom's new management wants to run the power utility, then they must not be surprised that we are having load shedding and blackouts. In my view, it is totally irresponsible and grossly negligent of them to operate the national energy supplier in this way. This is very serious," said Blom.

He thinks Eskom's management could even be held personally liable for losses due to load shedding.

"They knew what was coming and know how vulnerable the situation is. We are heading for dark days and if Eskom wants to bully its workers and bully analysts critical of its management, the public should act as watchdogs," said Blom.

Earlier this year, Fin24 reported Blom as warning that load shedding could likely be expected this winter. Eskom subsequently denied that possibility.

"Eskom will remain vulnerable until it sorts out the labour and coal issues - which will not be soon. Furthermore, I hear of plant breakdowns," said Blom.

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eskom  |  load shedding  |  protests  |  sa economy  |  energy
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