Durban South businesses hard hit by load shedding fear lower investor confidence and global competitiveness, and a solution needs to be found to make them sustainable.
“Load shedding is here to stay. This the sad reality, notwithstanding its impact on our economy and the economy of the South Durban in particular,” said chairman of the Prospecton Business Forum, Mark van Wyk.
“We can simply accept it as a reality and in typical South African style, complain and do nothing more. Responsible business however, cannot do this. We cannot and should not allow Eskom and eThekwini Municipality the pleasure of qualifying poor planning and incompetence through presentations and explanations with no solutions.
Load shedding cannot be viewed as a solution or be the only solution.”
Van Wyk was responding to the results of a survey conducted by audit, advisory and tax firm, BDO on the impact of load shedding on Durban businesses.
In the survey, 47% of the respondents reported that the electricity disruptions had a negative effect on their operating costs, while 59% said they had an adverse impact on service delivery.
“It seems that Eskom is abdicating the responsibility of power generation to business through the punitive practise of load shedding,” said Van Wyk.
“Backing this up with threats of destruction to all electrical components, where Eskom cannot guarantee voltage and thus implements load shedding and possible rolling blackouts, sends a message that government is not serious about productivity and manufacturing, electricity being a cornerstone of the sector.”
It is estimated eThekwini bills in excess of R500-million in electricity from business in the South Durban region per annum, with a number of large energy users situated here.
“Targeting specific users could be seen as a strategy of ‘divide and rule’, whereas South Durban should be engaged as a region as businesses here relate to each other and the impact of load shedding is not isolated,” said Van Wyk, who warned that together with an increase in electricity tariffs does not bode well for the local economy.
“Given the contribution to the economy of eThekwini and the province by South Durban, one would expect a different approach than simply scheduled load shedding.”
Van Wyk pointed out that although the negative impacts of load shedding were highlighted through the survey, what is missing or perhaps not covered in the survey are:
* Job losses due to loss of market share as a direct result of the inability of a small business to deliver.
* Supply chain challenges where just in time suppliers are out of sync with big business deliveries and the possibility of being replaced by a foreign supplier, notwithstanding government’s localisation policy.
* Short pay as a result of reduced working hours – where margins are small, a company cannot afford to subsidise salaries.
* Increase in crime during periods of load shedding.
* Increase in the cost of doing business, from disrupted internet connections to long periods of shut down and start up to increased debt through alternative electricity supply, to revised growth and reduced performance, to the revision of project plans as funds are redirected to energy provision.
“The result is planned expansion and maintenance will be reduced to critical interventions and thus fewer opportunities for the engineering, construction and related industries, major employers in South Durban, job losses and unemployment increase with related socio-economic impacts, notwithstanding the impact on the entire value chain.
This is occurring against the backdrop of high levels of unemployment in South Durban. What is the contribution of load shedding to this?,” queried Van Wyk.
He is also concerned with the engagement process utilised by Eskom and the municipality, by sector and then by individual big businesses. “The power to negotiate and influence an outcome is based on the size of the bill paid by the company. It therefore stands to reason that the impact of load shedding on smaller users is not seen as serious, with large users able to negotiate their levels of load shedding.
I am of the view that we need to have some very serious conversations: Is it time for industry and business in general to come off the Eskom grid? Can industry and business come off the grid and what are our options?
We need a comprehensive engagement as business around load shedding, so that business in South Durban can develop a unified position, consider our options and ensure that we remain sustainable.”
(Please note: Comments posted on this issue may be used for publication in the Sun)
