The cost of Eskom load shedding is running into billions per day. This week saw South Africa’s worst week of load shedding at Stage 6 lasting for several days. The last time SA had Stage 6 load shedding was in December 2019 and it lasted for less than a day.
This week’s crisis comes off the back of a wildcat strike by Eskom workers, which saw load shedding first going to Stage 4 and Eskom then being forced to escalate it to Stage 6 after most of its staff did not pitch for work.
Cost of Eskom load shedding
The economic costs is estimated by different economists as ranging between R1.5 billion and R4 billion per day.
The JSE closed weaker and the Rand also weakened against the US dollar.
The weakening rand spells more bad news for South Africans and Eskom, More fuel price hikes are expected early July 2022 for both petrol and diesel.
Longer term impact
The levels of load shedding experienced in 2021 potentially cost about 250 basis points of growth,
“If you’re looking at an economy that should’ve grown three percentage points faster or four percentage points faster, its half a million jobs potentially that we are losing out on. Who knows, if we were able to grow at 4% or 5% GDP what it would’ve meant in terms of attracting more investors and for job creation,” – PwC economist Lullu Krugel.
The country’s increasingly unstable power supply will not only drive away potential new investors but also cause investors that already have a presence here, to halt expansion plans.
“The business environment is quite uncertain as far as the future prospects of the economy are concerned.” – Alexforbes economist Isaah Mhlanga.
Looking for solutions
We were able to deliver the infrastructure projects for the 2010 World Cup. Why have we failed to solve Eskom for more than a decade since then?
Government, business, labour and civil society should urgently engage on the way forward. What are our most important steps to resolve the issues that we have. Failing to do so may well lead to the same scenarios that we saw last year in July in KZN and in parts of Joburg, which are not something that we want to repeat.