The ANC and its coalition is probably the most destructive force that the SA economy has ever seen, says chief economist at the Efficient Group, Dawie Roodt.
Roodt, who was speaking at a Business/Partners event on Tuesday (19 March), said that the exact harm inflicted could not be calculated, but likely amounted to trillions of rands in lost production.
“In the case of Eskom for example, the power utility has been totally ruined, financially,” he said, adding that the impact of Eskom’s failure on the economy amounts to billions in lost production.
“My own calculations suggest that the South African economy would be at least 10% larger than it is if only we had enough electricity.”
Speaking on Eskom’s current load shedding and debt crisis, Roodt said that the power utility’s issues could have a far-reaching impact on the economy.
“With the current shenanigans going on with Eskom, it is really touch-and-go as to whether we could face another technical recession.
“This will have a knock-on effect on the current debt/GDP ratio which would mean that a Moody’s downgrade is likely,” he said.
Cost to economy
According to energy analyst, Chris Yelland, stage 2 load shedding of 2,000MW costs South Africa’s productive economy around R2 billion daily.
However, the power provider is also seen as a major investment risk.
Government last month approved a R69 billion ($4.8 billion) bailout over three years to help rescue the utility, which is struggling to emerge from years of mismanagement, allegations of corruption and ballooning debt caused by cost overruns at two large new plants.
The new facilities – Medupi and Kusile – are not only massively over-budget and behind schedule but also defective and have contributed to the latest outages.
Many of Eskom’s coal-fired power plants are old and unplanned breakdowns have increased after the company fell behind on maintenance as its financial situation worsened.