SA power supply deeply concerning - Sacci

Sacci CEO Neren Rau says the delay at the Medupi power plant will have a negative impact on business.

Public Enterprises Minister Malusi Gigaba and Eskom CEO Brian Dames inspect the Medupi power station on 11 April 2013.

JOHANNESBURG - South African Chamber of Commerce and Industry (Sacci) CEO Neren Rau on Tuesday said he was deeply concerned about the state of power supply in the country.

He made the comment while speaking on The Midday Report on Tuesday afternoon.

Eskom on Monday announced the Medupi power plant in Limpopo would not be ready on time due to labour disputes, contractors and other "critical" problems.

The project, which was meant to alleviate pressure on South Africa's power grid, was meant to be completed in December.

But the plant will only open in the second half of 2014.

Electricity experts have warned that this could lead to load-shedding, but Eskom denies this.

"From a business perceptive, pricing of electricity supply is almost secondary to sustainability of supply. Those two factors compete very strongly as a key concern for business. With the setback that has been announced, we are concerned about the pressure that this places on business in the first half of 2014," Rau said.

"Our members have had a lot of challenges to deal with. Electricity supply and its pricing has been one of those challenges, but they've been equally concerned about challenges arising from the labour environment and the broader impact that disruptions in the mining industry have had for the economy and of course access to liquidity both in domestic and well as international markets."

However, Rau said Eskom's announcement was not entirely unexpected.

"This challenge that has emerged following Eskom's announcement, which isn't entirely unexpected, must be seen in terms of a context of rising pressures against business; both in terms of cost pressures as well as in terms of dealing with red tape and a very challenging domestic business environment."

Rau said 2014 will pose the biggest test to South Africa.

"The Medupi power station must come on before winter 2014. To date, winter 2013 has proved to be a challenge but a challenge that we've been able to deal with. I don't think that we would be as fortunate if we were to face winter 2014 with similar constraints."

Rau said government and Eskom should be stricter with their partners going forward.

"We need to up our game in terms of showing the world that South Africa will not tolerate low levels of quality and failure to deliver."