Home Opinion and Features SA faces bleak 2023 with intensified load shedding on cards

SA faces bleak 2023 with intensified load shedding on cards

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Struggling South African consumers have been warned to brace for even more intense load shedding next year as Eskom moves ahead with its six-month outage at Koeberg nuclear power station while scrambling for money to buy diesel.

File picture: Kevin Ritchie (ANA)

STRUGGLING South African consumers have been warned to brace for even more intense load shedding next year as Eskom moves ahead with its six-month outage at Koeberg nuclear power station while scrambling for money to buy diesel.

This will cripple economic growth and is a major source of investor concern.

It comes as Eskom last week ramped up load shedding to Stage 6 for the first time in three months due to a plethora of unplanned breakdowns at its ageing coal-fired power stations.

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By the weekend, the power utility eased load shedding to Stage 4 and Stage 2 as it had 5,901MW on planned maintenance while another 15,394MW of capacity was unavailable due to breakdowns.

Eskom spokesperson Sikonathi Mantshantsha on Friday reiterated that the current conditions at Eskom would intensify the likelihood of load shedding in the next year.

“As previously communicated, due to the depletion of the budget to acquire diesel for the open cycle gas turbines, Eskom has been forced to strictly preserve the remaining diesel for any extreme emergency situations such as multiple, simultaneous trips of generators. The pumped storage dam levels also need to be replenished during this time,” he said.

“The refuelling and maintenance outage starting on Saturday morning, as well as the long-term operation project of Unit 1 of the Koeberg nuclear power station, together with the chimney failure during October that has forced three generation units off-line at Kusile power station, will further reduce available generation capacity and exacerbate the occurrence of load shedding during the next six to 12 months.”

On Saturday, Eskom escalated load shedding to Stage 5 until further notice due to unusually high demand and the breakdown of a generating unit each at Hendrina, Kendal and Kriel power stations.

Eskom’s ongoing blackouts have reached record levels in 2022, with more than 170 days of load shedding in the year to date.

Public Enterprises Minister Pravin Gordhan last week acknowledged that power cuts were having a devastating effect on households and livelihoods, investment and the economy.

The country’s intensive energy users have not been spared the brunt of power cuts in spite of Eskom having a load curtailment arrangement with them which seeks to minimise the impact of power cuts.

Citadel Global director Bianca Botes said power cuts could hamper the momentum as data was pointing to the first increase in private sector activity in three months as demand recovered slightly.

“However, many companies continued to report weak economic conditions both domestically and globally. The local business environment has also been hit by ongoing load shedding,” Botes said.

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For instance, Anglo American Platinum (Amplats) on Friday revised its medium-term production guidance as it lost 105,000 ounces in platinum group metals (PGM) production this year, or nearly 3% of its total refined output, due to heightened power cuts.

Amplats CEO Natascha Viljoen said due to Eskom load shedding and the delay in the Polokwane smelter rebuild, total built-up work-in-progress inventory at the end of the year will be 350,000 PGM ounces.

“As a result, refined production should be 3.8 million PGM ounces, again within guidance,” Viljoen said.

This as the power utility last month said it had blown its budget and spent in excess of R12 billion this year burning diesel to keep the lights on.

The National Treasury said it would continue with the engagements with the Department of Public Enterprises and Eskom aimed at identifying solutions to this matter.

However, it said the staggered nature of the budget process made it difficult to consider and accommodate any ad hoc funding requests outside of this process, especially large requests that were made at short notice.

A number of business organisations have also urged the government to finance the required diesel purchases for Eskom in a bid to keep the lights on.

The Energy Council of South Africa, Business Unity South Africa, and Business Leadership South Africa urged Eskom to take all necessary steps to mitigate a further deepening of the crisis.

They said the elevated stages, such as currently being experienced, presented a major safety and security risk to assets, businesses, and ordinary citizens.

Eskom’s intensified power cuts come at a time when the government is celebrating a surprise upside swing in the economy as it grew by 1.6% in the third quarter, beating market estimates of a 0.4% slump.

This meant the size of the economy is now back to pre-pandemic levels.

BNP Paribas South Africa senior economist Jeff Schultz, however, maintained his well-below consensus 2023 gross domestic product (GDP) growth estimate of 0.2%, saying there were some cracks emerging in the outlook for consumers.

“Heightened load shedding into the fourth quarter and 2023, stickier inflation, less supportive commodity prices and a souring global growth backdrop mean that we should expect momentum in activity to slow down sharply from here and we even see scope for a small negative GDP growth print in the fourth quarter of 2022,” Schultz said.

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