Français 简体中文 About Us
Home | China Report | Africa Report | Business | Lifestyle | Services
China Time in South Africa
Current Issue
Cover Story
Table of Contents
Through My Eyes


Subscribe Now
From the Editor
Media Watch
Pros and Cons
China Report
Africa Report
Nation in Focus
News Roundup
Business Briefs
Business Ease
China Econometer
Company Profile
Double Take
Science and Technology
Living in China
Learning Chinese
Measures and Regulations




Media Links
Beijing Review
China Pictorial
China Today
People's Daily Online
Women of China
Xinhua News Agency
China Daily
China Radio International


Africa Report


VOL.7 March 2015
In the Dark
Dim light at the end of the tunnel for South Africa's ailing power sector
By Hannah Edinger

Planned rolling power cuts over the next few months and the threat of a total grid collapse will make 2015 a testing year for South Africa.

This is hot on the heels of a painful 2014 for Africa's second largest economy, which included the longest and costliest labor-employer dispute to date, stripping the country of almost $2.95 billion in revenues and worker wages in the platinum sector in the first and second quarters. This saw spillovers to many industries supplying the mining industry. A one-month violent strike by more than 200,000 metalworkers further crippled the economic outlook, disrupting production in the steel and auto sectors, as well as construction activity at overdue coal-fired power plant sites Medupi and Kusile.

The cherry on top for South Africa's underperformance in 2014 was the collapse of a silo at one of the country's coal-fired power stations, Majuba, in November. This resulted in the national power utility Eskom implementing load-shedding (a reduction in the load on the country's power grid), impacting consumer spending and commerce during the major spending season of South Africans. GDP growth in 2014 came in at a dismal 1.9 percent, in a region that continues to expand above 5 percent.

For 2015, there seems to be no light at the end of the tunnel. With supply falling short of demand, the country is in the midst of a power crisis that could plague businesses and households for years to come.

The need for routine maintenance of Eskom's fleet of power stations is now more desperate than ever. As a result, one of its two units at Africa's only commercial nuclear plant at Koeberg is expected to be offline until at least May. This could literally leave South Africans sitting in the dark during the next few months. In fact, Eskom announced in January that load-shedding will be implemented for 70 percent of the days from February to April - the equivalent of 62 days - during which national power supply will be irregular and economically disruptive.

Those recalling the not-so-distant 2007-08 debacle (with load-shedding over 23 days) are arguably more prepared this time round, with backup units such as generators for those who can afford them or those who cannot afford to have downtime. Despite the preparedness of some, the economic knock-on effects are expected to be more widespread and detrimental than seven years ago. Load-shedding shaved off about $377 million of GDP during 2007-08. This time around, it could dent South Africa's GDP by an estimated $11 billion. This equates to a loss of 3 percent of nominal GDP. The next few months could trim 1 percentage point from annual GDP growth. This adverse impact will be sure to reverse the gains from an oil price that has halved and trimmed real and expected inflation. Growth forecasts have been revised downward to about 2 percent.

The uncertain power outlook and unreliable access to electricity is likely to result in lesser planned investment by businesses and also reduced production opportunities. While big businesses generally have backup off-grid solutions, industries such as mining are affected, given safety risks. Essential services such as hospitals and clinics are also among those most at risk. In industries such as the information and communications technology sector, which are expected to be able to circumvent some of the impacts of outages, extended costs of load-shedding could be passed on to the consumer. But for small businesses, the implications are far felt as emergency power plans are costly, and a sector that employs about 60 percent of the country's labor force is likely to bear a great share of the burden.

With Eskom's construction scheme arguably too little and too late and with pending tariff hikes over the next few years, municipalities such as the City of Cape Town and the leafy suburb of Parkhurst in Johannesburg are examining off-grid solutions in order to diversify their energy supply or even become self-sufficient in the next few years. 

Any focus on employment-creating sectors dependent on electricity as an input will bring limited results. Industrial strategies to build export-orientated manufacturing capacity could be left wanting if foreign or local investors are not guaranteed basic inputs such as electricity. This is likely to tarnish South Africa's image in investor communities further.

(The author is a director at Frontier Advisory, a research, strategy and investment advisory firm)






Africa Report
Investment Diagnosis
-In the Dark
-Urbanization Flagship
-Power Plan
-Pushing for Change
ChinAfrica Staffer Wins "Chinese Dream" Photo Award
-BRICS Means Business
-Cameroon Aims for More Chinese Visitors
-Greening International Relations
-Switch Off Your Lights, Help The Planet
Nation in Focus
-November 2010
-September 2010
-June 2010
-May 2010
News Roundup
-February 2015
-January 2015
-December 2014
-November 2014
-September 2014





Useful Africa Links: Africa Investor | Africa Updates | AllAfrica | Africa Business | ChinaAfrica News | AfricaAsia Business | Irin News |
News From Africa | Africa Science | African Union | People of Africa | African Culture | Fahamu
| About Us | Rss Feeds | Contact Us | Advertising | Subscribe | Make ChinAfrica your Homepage |
Copyright Chinafrica All right reserved 京ICP备08005356号