Power cuts push traders to the edge

When Mike Atkins opens his factory in the mornings, he is not sure if he will be taking stock – or counting his losses.

Rolling blackouts have hit his small frozen foods business hard, with staff often arriving at stores across the city to find their products thawed and rancid, the blood from defrosted fish and meat trickling along white tiled floors.

“We have been crippled,” said Atkins, the owner of Freezerland Foods. “Absolutely crippled.”

While everyone has been affected by blackouts, that were implemented again in December after numerous faults at Eskom’s ageing power plants put even more strain on the already energy-starved grid, it is the small businesses that have been pushed to the edge.

Labour lawyer Michael Bagraim said: “Small businesses don’t have the luxury of moving production from one factory to another. They can’t just switch on a generator and absorb the losses of burning through barrels of fuel.”

In an extreme example, cellphone giant MTN last week installed its own 2MW power plant at its Joburg headquarters to reduce its reliance on Eskom.

Standard Bank has also installed a gas plant at its offices in a Joburg suburb. The plant, that costs around R40 million, will provide 17 percent of the 6MW required to keep the building’s lights on. It’s enough electricity to power about 2 500 homes.

Bagraim said for most of the 500 small businesses on his books, installing a generator, let alone a mini power plant, was not even a feasible alternative.

“I’m getting phone calls every single day. They are asking, how do we cope with this?”

He said these businesses were the “engine room” of the South African economy. Even the smallest problems could translate into a big impact on the GDP.

Energy expert Chris Yelland estimated that load shedding could cost the economy up to R30 billion a year. But economists such as Mike Schussler have taken a more conservative approach, saying frequent load shedding could cut back growth by at least R6bn. While the figures are up for debate, the bottom line is that blackouts are holding South Africa back.

Freezerland owner Atkins said he had lost R30 000 to load shedding. For a small business that operates on tight profit margins, it’s a setback he cannot afford.

But these numbers have another side. It’s not just lost profits, there is an increased strain on his staff.

At the company’s Tokai branch, manager Sophia de Wet said Eskom had not been sticking to its load shedding schedule. Just two weeks ago, the power had gone out without warning, knocking out the fleet of freezers.

“When the power goes out, it trips the earth leakage and we have to come in and manually turn everything on.”

So when they returned to work after the weekend they found that fish, ice cream and meat had thawed. The floor was covered in scarlet slashes of blood which had mingled with puddles of murky water.

“The smell, the smell… It was terrible,” she said.

At least half of the stock had to be thrown away.

“Every time the power goes out we have to come back in straight away and make sure we turn everything back on and mop up the floors.”

At a sheet metal factory in Killarney Gardens, power cuts have shorted-circuited expensive laser cutters. The owner, who asked not be named, said parts of his plant were put out of production for weeks as he waited for new parts to be delivered from overseas.

“And meanwhile we are missing deadlines and staff are sitting around doing nothing.”

At the Bootlegger Coffee Company in Sea Point, blackouts have resulted in lost stocks and lost customers for the cafe. Electricians in Wynberg spend hours without business as the neighbourhood is blacked out.

Peter Haylett, chairman of the industrial focus portfolio committee at the Cape Chamber of Commerce and Industry, said they had received complaints from Parow Industria. Factories have been frequently cut off, the down time gutting production as business owners are forced to send staff home.

He added that the blackouts had also come during harvest time which would severely impact some of the Cape’s primary exports, such as wine, fruit and canned products.

“This is a big potential loss area.”

Bagraim said every small business was suffering. However, there is no light at the end of the tunnel with load shedding set to continue for the next three or four years as Eskom plays catch-up after neglecting its infrastructure for the past few decades.

The labour lawyer said the only solution was to create more flexible work schedules.

Businesses now had to plan around load shedding, moving away from the typical “8 to 5” time slot and incentivising workers to work later in the day or come in on weekends.

He warned that if small businesses were complacent they would quickly be pushed over the edge and forced to close doors.

There is hope that the government might intervene in the energy crisis, that was exacerbated last week when half of Koeberg power station was taken offline for maintenance. During his State of the Nation Address President Jacob Zuma promised the government would invest R23bn in Eskom.

“The short- and medium-term plans involves improved maintenance of Eskom power stations and managing the electricity demand. The long-term plan involves finalising our long-term energy security master plan.”

He said these plans would have a focus on nuclear energy.

But, as Yelland pointed out, the ANC just recently sunk the System Market Operator Bill that would have led to the restructuring of the electricity market, ending Eskom’s monopoly and allowing smaller businesses, such as those in the renewable energy sector, to begin supplying the grid.

This was after Zuma personally endorsed the bill during his State of the Nation speech four years ago, said Yelland.

“This will cost South Africa dearly,” he told the Cape Argus.

With small business and corporate giants taking a hit during this period of blackouts, there is one company that is thriving. Online shop OLX announced that the listings of generators had increased by 131 percent over the past three months.

And with more and more users turning towards an alternative energy source, the company expected a 1 000 percent increase in listing before the year ended.

“(An) increasing amount of consumers (are) wanting to get off the grid or have an alternative, independent power option. We expect to see sustained numbers of generators on our online trading platform,” spokesman Tamryn Combrink said.

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