Intense power outages are most worrying yet, says Absa

While state-owned power utility Eskom has implemented outages in Africa’s most-industrialised economy for almost two decades, it has for the past seven days subjected the country to record blackouts — as much as 12 hours a day — to protect the power grid from collapse as its ageing, mostly coal-fired power plants fail. Short-term solutions to alleviate the crisis have yet to be announced. 

“I don’t know and I don’t think Eskom knows how quickly they’re going to be able to sustainably scale back load shedding from Stage 6,” said Peter Worthington, a senior economist at Absa, referring to the outages in which 6,000 megawatts of power is removed from the grid. 

Blackouts over the holiday period from mid-December to early January, when electricity demand eases, shows the strain on the grid, he said. How much of the outages are due to active sabotage, a cluster of simultaneous bad-luck events, or “deeply entrenched system problems” at the company — where maintenance over the past decade has been patchy — is unknown, Worthington said.  

Each quarterly decline of 1% in electricity consumption is associated with a 0.16% decrease in gross domestic product growth, according to Absa’s research. The economy is unlikely to expand by more than 0.3% quarter-on-quarter through 2023, according to a Bloomberg survey of economists that also sees a 45% chance of the economy slipping into recession. 

Power cuts likely shaved 1.3 percentage points off economic growth in 2022, when South Africa endured a record 205 days of rationing, Worthington said. Modelling based on historic data doesn’t account for companies having back-up power supply or retooling production processes to deal with outages, and cumulative damage to the economy’s growth potential from investment lost due to persistent power rationing, he said. 

StatsSA is considering including self-generated power in its monthly electricity-generation data.

Late this afternoon, Eskom cancelled a highly anticipated briefing, due to what it called “emergency engagements” with President Cyril Ramaphosa. In a statement, the crippled power utility said: “While we aim to hold the media briefing as soon as possible, the date and time can only be confirmed once meetings with the president are concluded.

“Eskom will in the meantime publish a  power alert with regards to the stages of loadshedding”. BM/DM