The South African Reserve Bank (SARB) says rolling blackouts are posing a risk to the financial stability of the country.
The Bank has added power cuts as one of the main risks to the country’s financial sector in its recent Financial Stability report.
Head of the Financial Stability Department of the South African Reserve Bank Nicola Brink says power cuts are a concern and is putting strain on an already weak economy. Eskom is under pressure to restore electricity supply as it implemented yet another Stage six round of rolling blackouts.
The Reserve Bank says rolling blackouts are starting to have a negative impact on the profits of small businesses, who risk defaulting on their loans.
Government relies on the banking sector to raise capital through its bonds. Local banks hold a lion’s share of government bonds.
Brink says, “A key concern is the strain that load shedding puts on already weak economic growth. And the viability of corporates, in particular SMMEs. Corporate liquidations continue to increase by 11.8 percent in the year to September 2022. Combined with high interest rates and debt servicing costs, this affects their ability to service debt. So far default indicators of banks are not yet raising financial stability concerns.”
Meanwhile, Public Enterprise Minister Pravin Gordhan urged Eskom management to work hard and get the country out of Stage six load shedding with immediate effect.
The Minister met with the board this week and asked them to act with a sense of urgency to restore power.
Gordhan has labelled the current round of rolling blackouts as unacceptable. Government has called law enforcement agencies to show stronger presence at Eskom power stations.
Confidence in Eskom management
President Cyril Ramaphosa says he is confident Eskom management will do what is can to restore power.
“We are going through a stage six load shedding, and this continues to be a concern. I’m sure it is being addressed by the very people who re-mandated to do so and we will continue focusing on what’s best for South Africans.”
The Department of Mineral Resources and Energy has signed additional 13 independent power projects under the 5th Bid Window of Renewable Energy IPP Procurement Programme.
This will pave way for new generation capacity to come online from 2025 and contribute 975 MW of additional electricity.
Meanwhile, Energy Experts have warned that South Africans should not rule out the possibility of Eskom implementing Stage eight rolling blackouts.
Rosemarie Van Staden, the chairperson of the National Accommodation Association of South Africa, shares more on the impact of rolling blackouts on the sector:
