Blackouts crippling business

Brian Hayward WEEKEND POST REPORTER haywardb@avusa.co.za

ESKOM‘S load-shedding is costing Eastern and Southern Cape businesses more than R21-million a day, but economists believe the unquantifiable “inconvenience factor” to residents and businesses means the true cost of the blackouts is much higher.

This week residents were given a dose of what the next four years will be like as planned blackouts hit the region daily.

And while larger industries are coping better, with generators to keep them going during outages, small and medium- sized businesses say they are being crippled by the outages, with job losses imminent.

According to BJM Securities economist Elna Moolman, the overall impact of the load-shedding – a result of Eskom‘s inability to provide enough power for the country until new power stations are up and running by 2013 – will cost the country at least 0,5 per cent, or about R100-billion, of its gross domestic product (GDP) this year.

With the Eastern Cape contributing about 7,8% of the GDP – mostly generated by Nelson Mandela Bay and Buffalo City – the annual loss for the province equates to about R7,8-billion.

“Load-shedding will have a big impact (on production),” said Moolman this week. “Food producers are suffering huge losses. Businesses like bakeries have to throw out their half- baked produce after an outage. Our forecast of the loss to the economy (of 0,5% GDP) is based on regular, planned load-shedding. With unplanned outages, the outlook is even worse.”

Moolman said smaller businesses were suffering the most.

“The impact will be worse in the first half of this year as people struggle to find ways to work around the load-shedding,” she said. “The forecast assumes we have found ways by the second half of the year to save electricity, lessening load-shedding.”

Bay economist Neal Bruton said the true cost of the blackouts – thanks to the “inconvenience factor” – was far higher than the monetary value.

“People don‘t shop in malls that are in the dark. It‘s impossible to calculate the psychological effect of people deciding to not to go out to restaurants and shops when there‘s an outage, but my feeling is the impact is going to be bigger than calculations show. The inconvenience factor cannot be quantified.”

On top of outages, businesses said they were also suffering huge losses after their equipment failed due to power surges when electricity was restored. Others said the cost of buying generators and then running them on diesel – now priced at R9,30 a litre – was unfeasible.

Owner of Cafe Dulce at The Boardwalk and Walmer Park, Shaun van Eyk, said the outages were devastating on his trade, which relied mostly on foot traffic. “It‘s hitting us directly on turnover, but also in terms of our equipment, which is being affected by the power surges. Four fridges have blown, as well as a dishwasher and a computer system.”

A major problem was scheduled outages this weekend while the crowd- drawing international Ironman competition was being held at the beachfront.

“We‘re due to be out during dinner time, which is peak trading time for us. Without that trade, there is a huge difference in our turnover,” Van Eyk said.

“In the long run it‘s a business-closing impact specifically in the food and beverage industry.”

East London bakery owner Ben Smit said his business was “barely surviving” as a result of the load-shedding.

“When a mixer of 50kg of dough stopped because of the outages, we had to throw it all away because the dough started rising. That amounted to about R500 in sales value (lost),” said Smit, who owns The Flour Basket in Nahoon.

“If there are trays waiting to go into the ovens, they‘d also have to be thrown out and this would be about R800 lost.”

Smit said he had to turn patrons away from the bakery‘s coffee shop during outages. “You can‘t calculate that loss.”

Dairy farmers said with their power- intensive farming they were being crippled by the outages. “Now that we‘re having to run our generators for 10 to 15 hours a week, the running costs on diesel alone are up to R80000 a month just for fuel,” said Port Elizabeth Bushy Park manager Puffer Hartzenberg.

Cinemas were also hard hit, especially when outages occurred during peak holiday viewing times. With each ticket costing about R25, a loss of 200 viewers attending midday shows over a week equated to a R35000 loss in revenue.

“It‘s hitting us badly. When the power comes back on, the popcorn is stale and the cooldrink is warm. Confectionery is a big part of our revenue,” said Walmer Park Nu Metro manager Lulu Pienaar. “With load-shedding, we have lost more than 50% of our turnover.”

The plastics industry is also reeling, having to get rid of half-finished mouldings after unplanned outages, or spending double money and time on reheating machines and re-moulding products.

“Much plastic is wasted. We‘re a small company working on small profit margins, so it‘s hitting us hard. Buying generators is not a viable option for us,” said Port Elizabeth MFA Mould and Design manager Makkie Wicomb.

Border-Kei Chamber of Business chief executive Les Holbrook said East London business was suffering a loss of up to 30%. “Business must insist on communication of the load-shedding from municipalities,” he said. “People need to know if what they‘re doing is helping.”

George Chamber of Commerce president Malcolm McClelland said the ongoing outages would see smaller businesses shed jobs in a bid to keep afloat.

“Not only is there an effect when the power is down, but it is equally bad when they say the power will be down and it isn‘t, because businesses have already rescheduled their staff.”

McClelland said an example was a car repair shop losing two working hours for eight technicians charging R200 an hour for their labour, equating to a revenue loss of R8000 per working week, excluding the loss of patronage.

Additional reporting by Barbara Hollands

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