Eskom's latest power outage has raised concerns in the ICT industry that economic and sector growth could be hampered for the next decade.
An economist, who did not want to be named, believes the impact on the economy will be felt for between the next five and 10 years as investors lose confidence in the country and move large projects elsewhere.
The SA Chamber of Business has also warned SA could lose investors as offshore companies' confidence in the country drops. Government is currently trying to attract investors as part of its plan to grow economic output - or gross domestic product (GDP) - by 6% a year by 2010.
One of the focus areas of this growth plan - the Accelerated and Shared Growth Initiative of SA - is to encourage offshore companies to locate contact and call centres in SA.
However, the economist warns that companies, which rely on the continuous supply of electricity, will not invest in the country. "More than just an interruption, it's a confidence issue; it will take a long time to establish our credibility again."
Luke Mills, MD of CallingtheCape, a business process outsourcing industry association, says most members have disaster recovery plans in place and, as a result, power outages are an inconvenience, and not mission-critical.
More of an issue is the impact on investor confidence due to Eskom's apparent failure, he says. "When we sell SA to international investors, we sell it on the basis of a robust infrastructure and power outages undermine that."
Telkom has already warned it is seeing the impact of outages. Customers experiencing problems are primarily those whose services are dependent on customer premises equipment such as telephones, modems and PABXs, says Telkom media specialist Ajith Bridgaj.
Bridgaj notes Telkom's core plant remains largely unaffected by the outages, owing to the fixed-line operator's backup power generation capability. "Appropriate contingency measures are also in place to ensure the quality of our service delivery."
Expect worse
SA's latest power outage, which resulted in rolling blackouts yesterday as Eskom attempted to balance the load, is not expected to be the last. An analyst, who commented anonymously, says - while he cannot quantify the impact this will have on the sector - the problem is "very serious".
He says if GDP growth is affected, the ICT industry - which has grown off the back of solid economic fundamentals - will be affected. "Government needs to shoulder some amount of blame for the situation."
Eskom yesterday notified the public it was "experiencing a higher than planned number of generating unit outages along with a higher than expected demand for electricity during this period".
However, the unplanned outages of 4 600MW have not been fully explained, says the analyst. Koeberg's unit one, which was shut down after mechanical failure, only accounts for 900MW. The analyst says this indicates bigger problems down the road.
Long time coming
Eskom CEO Thulani Gcabashe said last year the utility was under pressure due to rising demand. "The growth in GDP came faster than we all expected and we responded by accelerating the entire process forward. We are bringing projects forward to cope with the demand."
The utility company started planning additional capacity - especially during peak use periods - a while ago. However, additions to the national grid take some time to build, while SA requires an extra 1 000MW of capacity each year.
Eskom says it will spend R100 billion in the next five years to augment its production capabilities. The capacity-outlook from 2003 to 2022 indicates the country currently has installed capacity of about 38 000MW. However, peak demand is presently 34 000MW and will hit 55 000MW by 2020.
Market commentators argue that by the time Eskom started seriously planning, it was already too late. The utility should have been planning as long ago as 1999, not 2003, they note.
Eskom is in the process of bringing three disused service stations back online, adding 3 612MW to its capacity by 2011. It is also at various stages of investigating the feasibility of new plants, including coal-fired stations, gas stations, nuclear plants, water-driven power stations and wind-fuelled plants.
Share