• Tweet

Electrcity is a big concern for the economy and the country

 Some technical people are suggesting that in three years, if nothing is done, SA's electricity grid could start breaking down 

RELATED ARTICLES

• Eishkom!
• Power under strain
• Young boffins get the prizes
• Copper thieves nabbed
• Eskom to auction bonds
• Strikers cost Eskom millions in damages
• 'Poor service delivery cripples SA business'

South Africa’s electricity shortage was stifling economic growth, the head of the Independent Power Producers’ Association says.

“You cannot grow your economy without new electricity,” the association’s MD, Doug Kuni, said at a Free Market Foundation media briefing in Johannesburg.

Blackouts in 2007 and 2008 had cost the economy between R50 billion and R119 billion, he said.

These shortages also dragged down future growth as companies had not been able to expand their output.

But Eskom’s current strategy was also damaging, said Kuni.

The current power supply was short by 5,000MW.

“We seem to think the power crisis has passed... but with the current shortage, there should be load shedding,” he said.

In order to keep the lights on, Eskom had resorted to buying back electricity from large energy users such as smelters.

While they received a “handsome” return for shutting down their production, it came at the expense of economic growth.

Furthermore, foreign companies were deterred from investing in South Africa by the power shortage.

Eskom’s Medupi power station, which would add almost 5,000MW of electricity capacity, was still under construction.

It had originally been scheduled for completion in 2012, but was now expected to be complete at the end of next year. Further delays were also possible.

With such a power shortage, economic development plans were meaningless.

Municipalities had to turn away developments as there was not enough power.

City Power in Johannesburg had to reject developments which would have added a total of 350MW to power demand in the past year. Meanwhile, Ekurhuleni had turned down developments which would have needed 600MW of power.

Although independent companies could now generate electricity, they could not distribute power directly to consumers without Eskom, which owned the grid, he said.

In addition to the shortage of power generated, South Africa’s distribution infrastructure was crumbling, said Free Market Foundation spokesman Eustace Davie.

This could lead to further blackouts, and would deter investment.

“We’re in a serious situation,” he said.

Little maintenance had been done for several years, resulting in a backlog of about R35 billion.

Electricity was used by local governments to cross-subsidise other goods, he said. In addition, a decade-long attempt to restructure distribution meant municipalities had no incentive to invest in electricity infrastructure when they might not benefit.

As a result, spending on the grid itself had been neglected, he said.

“Some technical people are suggesting that in three years, if nothing is done, it could start breaking down,” he said.

Davie recommended municipalities should either contract out the maintenance, or sell off the grid.

The solution was to establish an independent grid, either under government control or at least partially privatised.

In this situation, electricity companies could compete with each other to offer customers the best price.

Comments

• Sign in or sign up to comment

Thu Jun 20 09:36:45 SAST 2013 ::

Oct 10, 2012

16-12-1838

"Little maintenance had been done for several years, resulting in a backlog of about R35 billion"

That's just the backlog, the tip of the iceberg in real terms! A cost compounded even further when considering any future economic growth, which also does not include projected maintenance and grid upgrades in order to increase capacity.

We are so used to hearing about billions and billions of Rand being lost or wasted these days that we just don't care anymore. Plus what does a billion mean to someone living in a shack, they can hardly comprehend what R10k is, so adding another handful of zero's onto this amount doesn't even register with them.

We really are in deep sh1t! To get the big picture of how deep the sh1t pile really is, combine this looming disaster with a few of the other self-inflicted major disasters that are lurking just beyond the horizon.... Namely the supply (or rather - lack of supply) of safe potable water, rampant corruption, the highest levels of unemployment ever experienced in our history, a failed education system, uncontrollable crime and an ever increasing unskilled, militant labour force....

The list appears endless! Our prospects for a happy future look very bleak indeed, the 'Rainbow Nation' is in tatters with only dark clouds ahead...my anc, my future ...yeah right...hey fat boy - Economic Freedom,not in this lifetime D00$...GOOD LUCK with that one people!
Report Abuse

Oct 10, 2012

TheNewFreedomFighter

Soon after the ANC won the democratic election of 1994 they started to drive out white expertise from Eskom. Many resigned and left the country because there simply was no other option for employment other than Eskom. I have two friends who were among them. The one now runs a massive power company in the USA and the other has his own electrical engineering business in Canada. The plight that the ANC has put us in is a direct result of its racist policies. So yea, we have blacks in position now that were previously occupied by whites, yet look where that got us: electricity shortage, massive price increases; no production expansion; black outs etc. etc.

The answer to SA's problems is not in more racial policies that divide us and favour one race over another but to capitalise on the strengths of everyone. I wish someone could calculate the cost of opportunities lost as a result of the ANC's racial policies and then project those losses into the gains they could have resulted in in terms of social upliftment for black people in SA.

This dire situation is clearly explainable in the light of the current state of the ANC where they are so focussed on choosing between two equally useless people: Zuma has a track record that is apocolyptic to put it politely and Mothlante is a dark horse that has never given any indication of what policies he favours. He is so shrouded in secrecy that I suspect he has never applied his mind to this and so secrecy is his cover. What is even more disconcerting is he is supported by the ANCYL who espouse policies that will grind SA into a dust bowl and economic desert within months.
Report Abuse

Oct 10, 2012

Mondi

We are in trouble!!!!

Everything seems to go from bad to worse. why dont we just maintain and improve the infrastructure we inherited from the previous goverment. Its so simple or am I wrong now?
Report Abuse

Oct 12, 2012

Honeybadger

Was the same not told to Mbeki who chose to ignore?
Report Abuse

Read all 4 comments