POWER CRISIS
MTN CEO joins the corporate chorus of concern over rolling blackouts worst-case scenario
MTN’s chief executive is the latest. Blackouts have shaved off R695m from MTN’s earnings for the year ending 2022, as the telecommunications giant had to spend more money on generators and backup battery storage.
More CEOs in South Africa are testing the resilience of their operations for the worst-case scenario of the country being thrown into permanent blackouts if the national grid collapses.
MTN CEO Ralph Mupita is the latest executive in corporate South Africa to outline the steps that the company plans to take to ease the pain of blackouts and the eventuality of a national grid collapse.
Mupita said South Africa risks becoming a “failed nation-state” unless the government resolves challenges including blackouts, which led to the economy shrinking by 1.3% in the last three months of 2022, business confidence levels sinking to the lowest level in two years, and S&P Global unexpectedly downgrading South Africa’s credit rating outlook.
Blackouts have shaved off R695-million from MTN’s earnings for the year ending 2022, as the telecommunications giant had to spend more money on generators and backup battery storage, which all power its cellphone towers during load shedding.
Without backup power measures such as generators and battery storage, consumers in South Africa would face poor quality telecommunication services during load shedding, or worse, a communications blackout.
South Africa is facing blackouts every day — the last respite the nation had from power outages was on Christmas Day 2022. In 2022, the nation faced 208 days of load shedding, which Mupita said proved difficult in stabilising MTN’s network. During this period, MTN deployed more than 2,000 generators to electrify its cellphone tower sites and keep them going, especially during higher stages of load shedding (4 and above).
But even backup power systems have limitations. Generators guzzle a lot of litres of diesel, and higher stages of load shedding (such as Stage 6, which leaves many areas without power for 10 hours or longer) don’t allow enough time for batteries to charge. Battery backup systems generally take 12-18 hours to recharge, while batteries have a capacity of about 6-12 hours, depending on the site category.
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If the blackout situation worsens
If load shedding worsens to higher stages than currently provisioned for, MTN plans to aggressively roll out batteries, generators and alternate power supplies that can electrify its cellphone tower sites, even during higher stages of load shedding.
MTN’s load shedding survival plan is set to be finalised in May, but Mupita said parts of it had already been implemented because the telecommunications giant was in the process of deploying battery storage/backup solutions. This is Stage 3 of MTN’s plan. Stage 4 involves deploying more generators at more cellphone towers. The survival plan will be implemented in the Eastern Cape and northern provinces, areas that are largely underserved in terms of telecommunication services.
The outlook for power cuts is worrying and MTN doesn’t expect the energy crisis to ease, saying it “anticipates sustained elevated levels of load shedding over the near term”.
Private sector companies — like MTN — see a total breakdown of the electricity grid as unlikely but not impossible. But their stance is that they would rather be prepared for any eventuality.
A grid collapse could last days, weeks, or longer, depending on the severity of the damage to the country’s electricity network, and the time it takes to restart it. Countries including the US, Venezuela and Pakistan have experienced grid collapses.
Standard Bank CEO Sim Tshabalala recently told Business Day: “You can imagine if there’s no power, food does not get moved, water does not get pumped, sewerage reticulation falls apart — it’s a proper meltdown.” This is because such infrastructure depends on a stable supply of electricity to keep running.
The financial services industry is also worried about the perennial power cuts. The South African Reserve Bank, through the Financial Sector Contingency Forum (FSCF), is preparing contingencies for a national grid failure. The FSCF is a unit instituted after the 9/11 attacks in the US.
While the central bank stressed that it is unlikely that a regional or national grid failure could occur, as part of its mandate to maintain financial stability in the country, it must look into such systemic risks.
The bank has been making plans to respond to a national or regional electricity grid failure since 2015, noting that the preparations form part of its responsibility to compile and test crisis management plans.
“As part of these preparations, the FSCF has been in regular contact with Eskom, the petroleum industry and the telecommunications industry. The FSCF also conducts periodic crisis simulation exercises to test the financial sectors’ ability to respond to such shocks,” the bank said.
The JSE has contingency plans for backup power in various forms in the event of a grid collapse to ensure that traders are not cut off from financial markets and can affect trades, according to the bourse’s CEO, Leila Fourie.
On Monday, Absa joined a chorus of companies that have complained about the negative impact of load shedding. According to Absa’s estimates, power cuts have shaved almost a percentage point from South Africa’s GDP.
The bank said the negative impact of blackouts was more on small and medium-sized enterprises as, unlike big businesses, they do not have the financial and operational means to have backup power measures. DM/BM
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I wonder how the national situation would have been different if business had voiced their concerns more emphatically and somewhat earlier?
Of course, as soon as big business’ profits are materially affected, these CEOs speak up. Why have they not spoken up before?
Our small business is closing after 8 years of providing quality service and product to our town. Layer upon layer of pandemic, lockdown, collapsing economy and no access to funding due to racial classification have eventually brought the business to its knees. Excessive expense of providing alternative power is the final nail in the coffin. Yet another smme goes to the wall shedding jobs, and hope for what we really believed possible in 1994.
Why are these supposed scions of the business world, the CEOs, such huge cowards that they refuse to mention a damn thing about ongoing deep corruption in South Africa ? Any twerp can tell that load shedding has a negative effect on business, we don’t need these “genius” CEOs to figure that out, we need them to put pressure on the ANC to reform its policies and to end corruption. Load shedding is but a symptom, whereas corruption is the illness.
Sad to see South Africa go down this path which could have been avoided.
CEO’s should have been aggressively rolling out condemnation of the rent-seeking and corruption that caused this crisis in the first place. But I guess they only speak out when if affects their bottom line.
The US has never suffered a grid collapse. Individual states & cities have. Most recently, Texas, for reasons completely different to those in South Africa. South African load shedding should not even be mentioned in the same article. Eskom’s failures are to do with sheer incompetence, fraud and theft on an industrial scale, over an extended period.
Brings a seminal moment to mind-back in the late ’90’s as recalled-when, I think, the CEO of then SAPPI Saiccor in Umkomaas made some uncharitable (but entirely valid) remarks about the competences of then upcoming new persons. He was lambasted, ostracised and forced to resign in disgrace with no support from his own company or other corporates or seniors. That has been the pattern ever since with big business cosying up to the ANC and not raising heads or voices. Most companies have done well in that time so why rock the boat? Now we see the consequences of their silence. Feel nothing for the “poor” cell-phone companies-we are all exhausting our data bundles on 4 and 5G-unable to use WiFi-and being charged royally to top them up!