'If Stage 6 lasted a cumulative 24 hours, economy likely to lose R12 billion'

The Money Show interviews economist Isaah Mhlanga (Alexander Forbes) and energy analyst Chris Yelland (EE Business Intelligence).

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Eskom announced on Tuesday afternoon (28 June) that load shedding would be escalated to Stage 6 from 4 pm until 10 pm on both Tuesday and Wednesday.

The beleagured power utility says it's under increased pressure because of an illegal strike at some of its plants.

This had already resulted in an escalation to Stage 4 power cuts from last week.

Public Enterprises Minister Pravin Gordhan has now said an agreement's been reached with unions to bring the strike at Eskom to an end.

Related stories:

Wage strike ends as Eskom and unions reach an agreement - Gordhan

Eskom hits us with stage 6 load shedding on Tuesday and Wednesday

Eskom's De Ruyter warns of possibility of stage 6 power cuts

Stage 6 load shedding equates to at least six hours without power per day, possibly in two-hour cycles.

The first and only time South Africa last endured this level of power cuts was in December 2019.

Motheo Khoaripe (in for Bruce Whitfield) interviews Isaah Mhlanga,Chief Economist at Alexander Forbes

He also gets comment from energy analyst Chris Yelland, MD of EE Business Intelligence

Yelland emphasizes that the current load shedding pre-dates the industrial action at Eskom

... so before the industrial action we were already having Stage 2 to Stage 4 load shedding. The industrial action, according to Eskom, has put a further 4,000MW at risk which translates into four stages of load shedding...

Chris Yelland, Energy analyst and MD - EE Business Intelligence

... so if we were having Stage 2-4 load shedding before the industrial action, this extra four stages would take it to Stage 6 to Stage 8 and we are in the midst of Stage 6 right now - I'm having four hours at a stretch... This 24-hour period is going to be eight hours [in total] of power off for me.

Chris Yelland, Energy analyst and MD - EE Business Intelligence

Are we edging closer to the reality of Stage 8 power cuts?

Yelland notes that Eskom itself made it clear during today's media briefing that there is a risk of Stage 8.

The return to wage negotiations announced earlier is certainly an encouraging sign, he says.

While the effect on the economy is dire, much depends on how long Stage 6 load shedding lasts says Mhlanga, and even the lower stages.

Just to give you a sense of what this might mean, if the Stage 6 lasts for a cumulative 24 hours... the different power shortages that would accumulate... it means the economy is likely to lose about R12 billion.

Isaah Mhlanga, Chief Economist - Alexander Forbes

I'm not saying this going to last for a full month... but just to quantify the magnitude, if were to have Stage 6 for a cumulative month that's R367 billion or 15,600 jobs at risk...

Isaah Mhlanga, Chief Economist - Alexander Forbes

Looking at the situation from a foreign investor perspective it is difficult to see such an investor looking to establish a large manufacturing entity here, coming to South Africa relative to other countries he says.

A lot of jobs are now part-time [latest stats]... which means corporates are taking a dim view of the future economic prospects of the country... Those workers are quite vulnerable... All it means for consumers is, whatever cash they have, hold onto it...

Isaah Mhlanga, Chief Economist - Alexander Forbes

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