2 years ago
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ARTICLE AD BOX
Electricity minister Kgosientsho Ramokgopa says the economic impact of load shedding will result in significant layoffs in South Africa, with hundreds of thousands of workers already sidelined.
Speaking before the National Council of Provinces, the minister admitted that Eskom is set to surpass its R30 billion budget to burn diesel on Open Cycle Gas Turbines (OCGT) this year.
However, he said that the focus should not be on whether the fiscus can afford diesel but rather if the economy can afford load shedding.
The South African Reserve Bank said that one unmet stage of demand results R300 million loss to the economy per day – at stage 6 this can move closer to R1 billion a day. The SARB estimates that load shedding will wipe two percentage points from GDP in 2023, and it has posited that it is adding around 0.5 percentage points to inflation.
Ramokgopa said these numbers show that the load shedding could lead to job losses in the millions.
“We know that in 2022, we lost upwards of 650,000 jobs as a result of load shedding,” he said. “And the projection, at the current rate of load-shedding, we are on course to lose about 850,000 plus jobs.”
He said that spending billions more on diesel for the OCGTs will ultimately help the economy.
“We have a choice of saving the additional billions to run the OCGTs and save the South African economy, or we choose not to spend those billions and allow the economy to collapse,” he said.
Food concerns
He also acknowledged that farmers have been heavily affected by load shedding, with many having to use generators to continue their operations.
The increased costs associated with having a generator has led to higher food inflation, with the Ramokgopa saying that the poor are the most affected.
He added that one major retailer told him that it had to spend R500 million due to load shedding. Various financial reports from large companies tell of groups losing billions of rands to load shedding through lost operating hours as well at mitigation costs.
Pick n Pay’s load shedding bill shoots past R500 million
Dawie Maree, Head of Information and Marketing at FNB Agribusiness, said that South Africans will likely to continue to spend higher prices on food, with businesses continuing to feel the effects of load shedding.
“Businesses/retailers have absorbed a lot of the costs as a result of load shedding, but they will only be able to do so up to a certain point, and then these may likely be transferred to consumers. In that respect, we shouldn’t expect a respite in prices.”
“Retailers are already spending millions of rands on diesel just to keep their stores open during load shedding.”
Although prices may remain high, food inflation is expected to decelerate this year.
Stats SA said that 14.0% year-on-year inflation of food and non-alcoholic beverages was the main contributor 7.1% Consumer Price Inflation for March.
Maree said that the prices for the majority of food items will start decelerating later this year.
Moreover, FNB Agribusiness expects some food prices, including grains, to drop. This is due to the easing of international prices and impressive crops.
“We expect an easing on food inflation from the second half of the year, although it will be very much dependent on energy/fuel prices and possible price shocks on the international level, given the impact of the exchange rate. The probability of the latter is low at this stage,” Maree said.
Jobs bloodbath in South Africa
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