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Eskom and electricity supply in South Africa

17 January 2008 – A statement was released today by Business Unity South Africa, urging urgent action on the state of the electricity industry in the country. The full text of the release is available below:

The ongoing load-shedding in the country has negatively affected the business community in the country. It has cost business, especially SMME’s, millions of rands with no “end in sight”, leading in despondency and pessimism. More seriously, it has now eroded local and international confidence in the reliability of South Africa’s electricity supply, and this situation inevitably reduces the country’s global competitiveness as an investment destination, especially since it diminishes South Africa’s competitive advantage as a low-cost electricity country.

Jerry Vilakazi, CEO of BUSA.

Jerry Vilakazi,

In this regard, BUSA, notes with even greater concern, media reports on the request from Eskom to “shelve business projects until 2013’. This is particularly concerning given that South Africa is looking to attract local and foreign investment, improve the performance of the manufacturing sector and increase economic growth to address the underlying socio-economic challenges. In fact, major South African and international companies have already made major capital investment plans, the outcome of which would be job creation and economic growth.

The implications of the scenario recommended by Eskom will reduce business confidence; discourage new investment and capital expansion programmes negatively affecting growth. This is more disturbing given the predicted global economic slowdown for 2008!

”We are seeking an urgent meeting with Eskom and Government in order to determine the extent of the problem and to have a clear, transparent and unequivocal plan going forward” says Jerry Vilakazi, CEO of BUSA.

In this regard BUSA will make concrete proposals to government on how to alleviate the burden faced by business as a result of load shedding and on appropriate incentives to improve electricity efficiency in the short term.

In further news, Joe Shwenke of Business Partners recently recommended that Eskom be compelled to build gas fired power plants, such as those in Atlantis and Mossel Bay,  rapidly as a short term solution to this crisis, albeit a more expensive option than coal fired plants. This would provide a solution within one year as opposed to Eskom’s repeated warning of seven years of blackouts.