ENERGY CRISIS: Power plans may come too late for some

As part of its plans to mitigate the crippling impact of load-shedding on the region’s economy, the City of Ekurhuleni (CoE) met with at least 100 local businesses to discuss ways and means that can be adopted to shield the city from the country’s escalating electricity crisis.

The event, which formed part of the city’s Integrated Development Process (IDP) and Budget Consultative meetings, was held at the Alberton Community Hall on May 12. The CoE said its main goal is to go off the Eskom grid by switching to independent power producers (IPPs).

Businesses, mainly those that are high-end electricity consumers, reportedly pointed out that load-shedding continues to severely disrupt production, and alternative power sources they are forced to use are increasing operating costs and hampering profit margins.

One of the options put across was to reduce the city’s dependence on Eskom by finding alternative and affordable power sources, such as opening the market for IPPs to sell power to the municipality.

Speaking during the breakfast, Finance MMC Nkululeko Dunga said the city is weighing up its options to get off the Eskom grid.

“The city is looking at ways of generating the additional 1 000 megawatts needed to ensure that we deal effectively with load-shedding. We are using between 1 200 and 2 400 megawatts and need an additional 1 000 megawatts to end load-shedding. This can be achieved through using IPPs, an avenue we are aggressively pursuing,” explained Dunga.

“The CoE has always been known as ‘the workshop’ of South Africa and the region has sustained that reality over the years. It was important that as part of the IDP and, ultimately the approval of the budget, we engage with major stakeholders. We have spoken to the residents, now we are speaking to business.”

Dunga promised that the city will increase the frequency of communication with all stakeholders so that all views are considered in putting together the city’s plans and budget.

The Boksburg Advertiser understands that the city boasts about 40 registered independent power producers that are said to be capable of assisting the metro in its mission to move away from its reliance on Eskom for electricity.

According to metro spokesperson Zweli Dlamini, apart from gearing up to ‘break up’ with Eskom, another issue highlighted by high-end electricity consumers was the need to introduce measures that can help to enhance responses to service delivery in general.

This includes taking decisive action to deal with the problem of infrastructure vandalism, particularly cable theft which is a common culprit of unplanned power and water outages.

Businesses also appealed for improved communication between the metro and stakeholders, especially when there are service delivery disruptions.

Toll on businesses big and small

Retailer

The Advertiser spoke to a few local large and small business owners about the impact of load-shedding on their daily operations.

Frans Gouws, manager at The Square Superspar, said due to load-shedding their store frequently disposes of thousands of rand worth of goods and they spend substantial amounts on alternative power systems per month.

According to Gouws, due to this and escalating operating costs, the business, which used to boast 120 workers, was recently forced to scale down to 106 workers, and it’s likely to retrench more workers if electricity issues persist.

“It’s a big loss to the company and we can’t carry on like this. One of our most recent worst days was May 15 when we were left without power for the entire day and part of the night.

“On that specific day, the business was down about 20% because of all the other services that we have had to suspend. Our running cost increased by at least 15 % too. Just to keep the lights on, we spend between R40 000 and R50 000 per month on one store,” Gouws said.

“That money should be invested into other business opportunities for the store and to create jobs. What we have also observed is that customers are now reluctant to buy perishables, like meat, in bulk anymore. We avoid keeping too much meat because we know the generator could pack up as it is not designed to run for long hours.

“It has also become a struggle to get certain products from suppliers because their production is also interrupted and sometimes they also have to throw away products that were spoiled due to power disruptions and start over again. This results in the escalation of prices.

“We can’t use certain equipment for cooking food with the power from the generator. We are even considering outsourcing the bakery section, which means about 10 of our staff would lose their jobs.”

He pointed out that on top of the rotational power outages, businesses are forced to put up with prolonged outages, caused by system failures that are often attributed to cable theft or infrastructure vandalism during load-shedding.

“Where are our SAPS and EMPD to protect the essential infrastructure? We often wake up at night to chase after cable thieves with the help of security companies, and the police are nowhere to be seen.

“Government must bring people on board who can supply reliable electricity. For 10 years they have been telling us lies about how things will change for the better at Eskom. Instead, things have gone from bad to worse. Investors are running away because of load-shedding. Look at the rand/dollar exchange rate.”

Car wash

Valetique Autowash’s Corne Rautenbach said their turnover has gone down by at least half of what it used to be a couple of years ago. She said sometimes it’s not even worth opening for business, because the additional cost of alternative power has become unaffordable.

“We spend more than R500 on petrol every time the electricity goes off. In addition to this, we still have to pay other bills such as salaries, cleaning chemicals, rent, water, and other services.

“We have generators, but it’s not enough to run all the wash bays, especially the bigger pressure pumps, so we offer minimal services to customers,” she explained.

“If things continue like this, we’ll be forced to shed more jobs. What we are already doing when there is no power is asking about half of the staff to go home. No work no pay applies.”

Workshop

Hendrik Dreyer of Noise Boys in Rietfontein Road said the losses suffered due to load-shedding have left him with no choice but to shed jobs.

Their turnover dropped by between 15% and 20%, mainly due to power disruptions and compounded by other economic issues.

“The problem starts from home. You wake up to no power, then traffic is a nightmare and when you finally make it to work there’s no power either,” he said.

“We work with metals but can’t use certain machines, like the bending machine, which requires high voltage power. With the generator, I can only use one lifter and one welder at a time. It’s a difficult situation that threatens our livelihoods.

“I had to let two staff go at the end of last year because the business couldn’t afford to pay their salaries. If it carries on like this we all going to end up without jobs.

“The problem is the big guys in power don’t care about their people.”

Landlord

Charlie Bentel, MD of Bentel Property Consultants, described the situation as a crisis that badly impacts everyone.

He said authorities need to put their egos and differences aside and work together to find a solution to the problem.

“The current situation is tremendously impacting operations in all sectors. We are under dire times, and it’s so upsetting to see people struggling like this because of Eskom’s failing infrastructure,” said Bentel.

“This is putting a strain on everyone across the board. For example, my tenants at the shopping centres, motor dealers, and residential and office parks are struggling to pull through. As a landlord, I have to sit down with them and look at alternative ways to hold out against the situation.

“Their running costs have become extremely unaffordable.”

Bentel pointed out that many businesses can’t afford backup power, and this becomes a catch-22 situation because when the landlord puts the backup power in for them, they need to pay for it on top of their rental.

“This means rentals need to escalate, but as the landlord, you can’t escalate the rental because tenants can’t afford it. For example, many motor dealerships have generators and their costs have gone up dramatically to keep the lights on.

“On top of this, there are other bills to pay. So what happens is businesses downsize, move to smaller premises and reduce staff, creating unemployment and landlords are losing tenants due to this shrinkage.”

He advised that the first step for landlords seeking to help tenants in these difficult times is to listen to their issues and work with them to find solutions.

“We have to look after our tenants and avoid pushing things to a point that will destroy them. It’s tough. You feel for the people who are struggling because they have lost their jobs and have no food.

“We are already struggling with high unemployment and crime. My biggest fear is a scenario such as what happened in July 2021 in Gauteng and KwaZulu-Natal with the riots.

“Something has to be done. For the good of our country, we need to get the right people in for the jobs, put all our differences aside and do what is in the best interest of the people.

“I maintain a positive outlook and believe we have survived the worst of times. I believe that there is potential to turn things around. This country is full of opportunity and we just need to unlock it.”

Township businesses forced to cut jobs
According to the Nedbank Insights Report, conducted in partnership with the Township Entrepreneurs Alliance (TEA), over 64% of small township businesses cease operations during load shedding and almost 66% of businesses have shed jobs because of load shedding.

The research found that many township small businesses are heavily reliant on electricity to operate. It was found that 64% of them stop operations during load-shedding and simply do not operate until the power returns.

According to the survey, only 17% of businesses improvise (by improvise we mean find hacks to operate without using alternate sources of energy, for example by finding alternative business venues, performing other tasks, or rescheduling appointments), while 19% use alternative sources, such as generators, inverters or backup batteries, gas, paraffin, or solar.

In a country with an unemployment rate of around 33%, the study found that most township small businesses experiencing financial losses to the extent that 66% had to retrench employees to remain operational, and just over 5% closed down entirely. This trend was reflected across all sectors, with the food and beverage sector most severely impacted.

The study also showed that load-shedding did not affect all sectors equally, and food and beverage sector those providing food services in particular were hard hit by the outages because they deal with perishable items that need cold storage.

The biggest category of those surveyed was the food and beverages industry (17% of the total sample). About 57% of this percentage – comprising bakeries and food retailers (including retailers selling frozen products like ice and ice cream) indicated that they could not do anything during load-shedding.

The majority of these businesses have been operating for less than five years. The biggest impact on them, other than losing business, is throwing away spoilt food, baking mixes or melted ice creams. This is the sector that has lost the most employees due to load-shedding
The report also found that load shedding has led to increased operating costs, lost revenue and declining margins.

Also Read: How are you preparing for higher load-shedding stages?