The SA Daily
17 October 2019
Bad power cuts are back
- Eskom has abruptly implemented stage 2 load-shedding, citing a system severely constrained due to “the loss of additional generation, delays in the return to service of the units that are on planned maintenance, and limited diesel supply”.
- Power cuts decimate SA’s economy and sovereign ratings. In 1Q19, when GDP contracted 3.1% q/q seasonally adjusted and annualised, Eskom had implemented stages 1-4 loading-shedding —a total of 15 days of power cuts, with stage 2 load-shedding of seven days long and stage 4 of five days long.
- The impact of load-shedding on economic activity differs, depending on the severity (stages) and duration (number of days). A quantitative analysis by the SARB, which derives the intensity of load-shedding, shows that since 2008, load-shedding was the most severe in1Q:08, 2Q:15, 3Q:15, and 1Q:19. Real gross value added (GVA) of the electricity-intensive mining sector contracted in all four of these high-intensive load-shedding quarters, while mining’s GVA contracted in three of the four quarters. The utilities sector also contracted in all four of these quarters.
- A regression analysis shows that as load-shedding intensity increases, SA’s real GDP growth decreases by a statistically significant 0.06%. In addition, the intensity of load-shedding was found to have the largest negative statistically significant impact on agriculture, forestry and fishing; mining; electricity, gas and water; manufacturing; and transport, storage and communication sectors (see chart).
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