Home South African Business leaders have mixed reaction to proposed state of disaster

Business leaders have mixed reaction to proposed state of disaster

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South African business leaders have been left divided over the proposal by the ANC that the government should declare a national state of disaster at Eskom in a bid to end the ongoing energy crisis.

Eskom has plunged the country into its worst bout of power cuts, which have crippled economic activity due to significant unplanned breakdowns at its coal-fired power plants. File picture

SOUTH African business leaders have been left divided over the proposal by the governing ANC that the government should declare a national state of disaster at Eskom, in a bid to end the ongoing energy crisis.

This comes as the struggling power utility has forecast a two-year period in which it would be able to return its generating capacity back to acceptable levels above 70% from the current lows of 53%.

President Cyril Ramaphosa on Monday said there was clear direction from the ANC national executive committee (NEC) lekgotla that the government must resolve the immediate task of load shedding within a much shorter time-frame than what has been projected.

The Disaster Management Act of 2002 assigns various powers and duties to the national disaster management centre, allowing the national executive to direct and co-ordinate the activities of all government agencies and also allocate government resources as necessary to respond to the disaster.

Andrew Bahlmann, the CEO of corporate and advisory firm Deal Leaders International, said the declaration of a national state of disaster at Eskom should entail doing away with all the business-as-usual policies enacted in South Africa in recent decades.

Bahlmann said whether or not the declaration was effective depended almost entirely on who government places in charge of managing the disaster, and it should not be somebody involved in politics.

“Talk of a state of disaster is an admission that the government has thoroughly mismanaged Eskom. It signifies complete desperation and panic ahead of a general election – but asking the people who got us into this mess to now resolve it is wishful thinking,” Bahlmann said.

“I do not believe a declaration of a state of disaster is necessary – the government simply needs to implement all the rules it already has and remove red tape that either exists or is in the form of policymakers interpreting rules in an obstructive manner.”

Eskom has plunged the country into its worst bout of power cuts, which have crippled economic activity due to significant unplanned breakdowns at its coal-fired power plants.

The power utility on Tuesday ramped up load shedding to Stage 6 in the evening, with Stage 5 implemented during the day continuously until further notice after six generating units broke down.

Trade union Solidarity also expressed fierce criticism against the idea of declaring a state of disaster, saying that this would do more harm than good.

Head of the Solidarity Research Institute Connie Mulder said it was rather the government’s inability to use their current power that led to the crisis, and a state of disaster would once again open the door to large-scale corruption and fraud.

“The ANC government declaring a state of disaster to deal with load shedding is like trying to put out a fire with petrol,” Mulder said.

“It leaves one cold to think that the same government who was responsible for the banning of warm chicken, sandals and shorts during the previous state of disaster, now wants to apply that decision-making ability unrestricted to the power crisis.”

Solidarity also said that although there were some benefits linked to the declaration of a state of disaster, the chances that such benefits will materialise were extremely small, while the risks associated with establishing such an order can be destructive.

However, Old Mutual Wealth investment strategist Izak Odendaal said the country was unlikely to see a repeat of the Covid-looting since that involved vast amounts of money being spent at short notice, while the whole country was panicking over the pandemic and not sure what to do.

“An energy state of disaster is unlikely to see a similar broad increase in spending. It is likely to be smaller and more targeted, and mostly focused at removing obstacles.

“It should not have come to this, but it does at least signal that the government is serious about the issue, after years of broken promises.

“The main thing is to fix Eskom as best we can given how old most of its power stations are and to bring as much private generation on stream as quickly as we can, from large and small businesses, households and independent producers,” Odendaal said.

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