How South Africa’s Blackouts Are Crippling Businesses

(Bloomberg) -- Businesses in South Africa are struggling to operate amid rolling blackouts that affect their operations for as many as five hours at a time.

The power cuts by cash-strapped utility Eskom Holdings SOC Ltd., which provides about 90 percent of the country’s electricity, are a “hugely damaging reality check,” President Cyril Ramaphosa said Thursday amid a fifth straight day of blackouts. The reductions may cost the country as much as 5 billion rand ($353 million) a day, according to the Organisation Undoing Tax Abuse, a civil-society group. Bloomberg visited some businesses during blackouts to see how they cope with the situation.

Suzanne van Weely is throwing out as many as 15 loaves of unbaked bread daily -- about a 10th what she produces at her Supercalifragilistic bakery and coffee shop in Linden, Johannesburg.

“People don’t get the things they want and they walk out,” van Weely said. With fridges shut down, cheesecakes, mousses and trays of tiramisu “are going off. It’s all stuff that costs money to make,” she said.

Across the road, trading at her father Ronald’s store, Magnificent Paints and Hardware, is at a standstill. When the power goes out his regular customers -- local contractors -- stop working and so do his orders and sales. Three of his six delivery trucks are parked in the yard while he sits in a back office lit only by a rechargeable lamp and the light from his smartphone screen. “The power outages are way too long,” he said. “Four and half hours is way too long -- most people work for eight hours so more than 50 percent of the workday is lost. They should make it two hours then we can at least get some business done.”

Around the corner, the screens on electronic fuel pumps at the Linden Garage gas station are blank. While owner Marco Dalle Ave jokes that his old mechanical pumps were seemingly more advanced and better suited to rolling blackouts, he is worried about turnover and having to pay staff. “If you can’t operate, you can’t make money,” he says. According to him, a generator would cost more than 100,000 rand --which he can’t afford.

Francois Labuschagne, who also can’t afford a generator, said electricity shortages are killing business at Print2Go, his printing shop. “It is like the economy has just been cut in half -- half of the economy is operating half of the day and it is not like there is plan,” he said. “As a business owner, this is a ridiculous situation, we’ve got staff to pay -- if the business goes under then staff lose their jobs.”

While the Rembrandt butchery has a back-up generator, power cuts still have a devastating effect, said Marco Huisamen, its manager. With gasoline prices close to record levels, running the generator is expensive and doesn’t provide nearly enough energy to keep all the lights on, fridges cold and meat band saws working all at once.

To contact the reporter on this story: Prinesha Naidoo in Johannesburg at pnaidoo7@bloomberg.net

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Ana Monteiro, Gordon Bell

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