‘Eskom backlog biggest obstacle’

Mogomotsi Magome

SOUTH Africa’s electricity crisis is shaving 1 percent off economic growth a year and preventing the country from achieving its employment and development targets, President Jacob Zuma admitted on Tuesday

He was giving a “report back” on the government’s implementation of the National Development Plan, the first since his government’s commitment to a nine-point plan to revive the economy in February.

The electricity crisis, which has seen businesses and ordinary South Africans facing almost daily blackouts as Eskom tries to catch up on maintenance backlogs, was the country’s biggest obstacle, costing the economy up to 1 percent in economic growth.

This has rendered the NDP’s ambitious target almost moot, and the economy now faces a new round of widespread job cuts that threaten to put the state and ruling party at loggerheads with business.

“We committed ourselves to 5 percent growth rate by 2019. The 1.5 percent economic growth rate attained in 2014 is a distance from that NDP ambition. Our estimate is that electricity shortages are currently costing the economy close to a percentage point in economic growth,” said Zuma.

But Zuma also attempted to rally the country as the economic crisis bites, reminding South Africans of the still unfavourable global economy.

He also said forecasts predict growth would double, to 3 percent annually, as the energy crisis eased and the economy responded to the nine-point stimulus plan.

Zuma was flanked by his cabinet ministers at yesterday’s briefing, which was preceded by meetings with the Presidential Business Working group on Friday. It is understood industry leaders spoke frankly about the obstacles to greater economic growth.

Zuma said progress had been made since national government intervened in the Eskom crisis, which saw Deputy President Cyril Ramaphosa appointed to head a war room to sort out the state-owned enterprise’s problems.

This includes the short-agreements that have seen an additional 800 megawatts added to the grid and through co-generation with independent producers and 450MW realised through the energy efficiency programmes.

Another programme with renewable energy independent producers was also contributing an additional 1 800MW to the grid, with a total of 6 327MW expected to be added in the next two years through 92 alternative energy projects.

“This is a result of South Africans working together to alleviate the impact of the electricity challenge, and over and above that, energy efficiency results in savings in energy costs and reduction in emissions,” he said.

Zuma said government was seriously concerned by the threat of job losses in the mining sector as mining remained a critical component of the economy, and should remain its backbone.

A task team established by Mineral Resources Minister Ngoako Ramahlodi was expected to develop detailed proposals to avert the job losses.

“The threat to job losses in the mining and steel sectors is of serious concern to government as it would have a negative impact on many families, communities and the economy,” he said.

The task team was expected to report back to the minister this week.

But the looming jobs’ crisis could still be a bone of contention between the state and industry, with growing signs that the government is prepared to take a hard line against mass retrenchments.

Last week, Ramatlhodi threatened to suspend mining giant Glencore’s operating licence over its plans to downscale operations at one of its mines, threatening thousands of jobs.

In a hard-hitting editorial in The Star newspaper (sister to the Cape Times) on Friday, the ruling party’s secretary general Gwede Mantashe accused SA business of being trapped in old ways of operating, using mass retrenchment as the first response to any crisis. He called on industry to “take responsibility” for the country’s jobs crisis.

“Working people should be treated with respect at all times. They are human assets, not mere tools of production.”

Platinum producers Lonmin has said it intends retrenching close to 6 000 employees, while Anglo American Platinum is looking to reduce its workforce from 24 000 to 16 500 in the Rustenburg area. Kumba Iron Ore has already shed 1 160 jobs.