South Africa has been experiencing rolling blackouts since 2007 as Eskom struggles to meet electricity demand © AFP/Getty Images
South Africa has been experiencing rolling blackouts since 2007 as Eskom struggles to meet electricity demand © AFP/Getty Images

Energy crisis ‘biggest single risk’ to SA economy

16 January 2020

South Africa’s (SA) government has been urged to encourage new private-sector supply options to end the country’s power crisis. 

Mining industry body, Minerals Council SA, said the country’s ongoing energy supply crisis “is the biggest single risk” to SA’s economy.

Insecurity of power supply and rapidly escalating costs are at the forefront of constraints on the economy and the mining industry while Eskom, the state-owned power company, is in need of urgent rehabilitation, the council said.

Eskom indicated it needed two years of permanent stage two load-shedding to give it the space to fix certain power stations. However, the council said the action would be “disastrous for the economy” unless urgent steps are taken to encourage additional private supply from existing and new sources. 

“In addition, government and Eskom should be contracting in, at the least cost possible, any extra renewable energy from existing wind and solar plants that are sitting idle,” it said. 

In order to do this, the government must urgently tackle red tape which is holding up additional power that could be brought in to bridge the gap, it said. 

The council also warned SA is “perilously close to falling into a debt trap”. However, it said solutions lie in addressing government spending, broadening the tax base through higher growth and job creation, and stopping the continued waste of resources going into bailing out state-owned enterprises. 

“Government also needs to crack the whip on unauthorised expenditure and to ensure that corruption and malfeasance in procurement and contracting in government is dealt with through proper prosecutions in 2020,” it said.  

Minerals Council CEO Roger Baxter said: “Investor and business confidence is declining to levels not seen for many decades. While the situation the country faces today is a consequence of the decade of mismanagement and corruption of a previous government, today’s political leadership needs to act with great urgency to turn the economy and our society around.”

Last month, president Cyril Ramaphosa said the country needed an additional 5,000 megawatts of electricity capacity to overcome its problems with load shedding.

SA has been experiencing widespread rolling blackouts since 2007. Eskom supplies more than 90% of South Africa’s power but is struggling to meet electricity demand.

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