Investors are holding back on investing in energy-intensive projects in South Africa as the country’s power crisis undermines business continuity and hurts economic growth.
“There are large investments, which are energy-intensive where the investors are cautious because they need to see that we are able to get the investment requirements in place,” Minister of Trade, Industry and Competition Ebrahim Patel said at an event on Thursday.
“So, they’re anticipating that we need to be able over the next two to three years to resolve the energy crisis.”
Patel was speaking ahead of the country’s fifth investment conference due to take place in Johannesburg on April 13. In 2018 President Cyril Ramaphosa set a target to raise $100 billion of investments over five years to support growth and create jobs in the continent’s more industrialized economy.
South African companies are spending billions of rands to keep businesses running as state-owned Eskom Holdings SOC Ltd., plagued by breakdowns at its coal-fired power stations, implements rotational blackouts — locally known as load-shedding — for as long as 12 hours a day.
The outages of about 6 to 12 hours may cost the economy at least R204 million a day, according to the South African Reserve bank.
Eskom has rationed power for 15 consecutive months as of April, which includes a record 141 consecutive days from Oct. 31 to March 20, according to data compiled by Bloomberg.
“To the extent that we are able to address our energy challenge rapidly, I think that’s going to inject more confidence in the investor community and I have no doubt that we can achieve more than the pledges we have now if we can increase power supply,” Patel said.