South African companies are now cutting staff due to stage 6 load shedding

South Africa’s latest round of stage 6 load shedding is devastating and is already being felt across the economy, says Business Leadership South Africa chief executive Busi Mavuso.

She said in a weekly open letter on Monday (4 July), that this is most visible in the labour market, with some companies forced to cut staff as they cannot open for trading.

“I have been told of companies forced to lay off staff because they simply couldn’t open their doors. Those with generators couldn’t get diesel to fill them fast enough. Those on batteries found them running dead.

“This is obviously also a crisis for Eskom, with the loss of generation capacity directly linked to illegal labour action accompanied by sabotage and violence. Yet chief executive André de Ruyter was front and centre to explain to the country and to business what was happening.

“He availed himself to address the BLSA Council to explain the situation on Wednesday and kept the country informed via the media. The openness was welcome.”

Mavuso said the only way to ensure the country does not face these outages again is to diversify the sources of electricity in South Africa.

“We cannot rely on a single state utility any longer. We have known this for some time and had we acted more vigorously sooner, experiences like last week could have been avoided. We have the right ingredients – the private sector can now build plants of up to 100MW without a licence.

“The renewable energy independent power producers programme can procure far larger power production. Within a matter of years, we could substantially diversify the producers of electricity in South Africa.”

While some progress had been made, it has largely been too slow, said Mavuso.

“One very good intervention has been the decision of Eskom to make available the vast tracts of land it owns in Mpumalanga to independent power producers. Much of this land already has the regulatory approvals needed to produce electricity and is close to grid connection points. A fortnight ago, De Ruyter announced the first 18 successful bidders for leases on this land.”

They will each put up 100MW plants, adding 1.8GW in capacity. Only 11% of the 36,000 hectares available will be used by those first tenants so there is much more potential from this source, she said.

“There is also an acceleration in other private producers registering new plants with the National Electricity Regulator of SA. The regulator has so far approved 18 amid an “avalanche” of applications. The last approvals were done in 19 days from receipt of the application. That is a positive sign that red tape has been removed from the process of private generation.”

“The signs are clear then that the future electricity market will be a diverse one. And in that scenario, industrial action at one producer does not necessarily result in load shedding. I suspect that those on strike foresee that future and the effort to extract higher wage concessions was driven by the knowledge that one day it will be impossible to hold the country to ransom.”

Read: Load shedding is killing one of South Africa’s biggest industries: expert