The cost of alternative energy solutions for the energy intensive upstream industries is extremely prohibitive, given their consumption, resulting in these industries being bound to
Eskom and exposed to the punitive cost increases. While the downstream industries that are relatively less energy intensive are able to make provision for alternative energy solutions, the cost of running these alternatives is equally prohibitive.
Apart from the fact that the energy crisis detracts from the investment attractiveness of South Africa, a very concerning long-term implication is emerging.
Companies are sacrificing long-term capital that could otherwise be invested in expanding their operations and are spending these scarce resources in pursuit of immediate survival. The long-term implications will be a continued structural decline in the performance
of the metals and engineering sector, which has already been tracked at a rate of 1.6% on a compound annual basis since 2008. Employment in the sector, especially among woman and youth, has contracted at the same pace over the same period, contributing to
the socio-economic calamity that the country already faces.
Only a clear, honest and dogmatic focus on structural reform in the energy sector will move the country out of this crisis. While multiple efforts in this regard, including the reforms announced by the President in July 2022, are welcome and present a fundamental
shift to the management of the electricity supply industry, progress to date has been painfully slow.
The level of the crisis and the risk to the economy requires a response as aggressive as the response to the Covid-19 pandemic. The supply of reliable, consistent and efficiently priced electricity is not only in the best interest of the private sector but
the entire South Africa. Therefore, private sector involvement in the provision of electricity should be expedited without restriction and delay.
Tafadzwa Chibanguza
Chief Operating Officer