Russia-Ukraine war: SA about to be hit hard

SOUTH Africans are under the cosh. Increases in the price of fuel have taken petrol inland to over R21 a litre – a 60-litre tank now costs over R1,200 to fill. With the war on Ukraine sending the prices of oil, gas and coal spiking, the impacts are already being felt.
Economists predict another huge petrol price increase in April and South Africa (SA)’s reliance on open cycle gas turbines for emergency power is a major risk. With an energy grid still largely reliant on coal, Eskom is seeing flames and its cost base will go up as the coal price surges and demands for exports rise.

The electricity utility had 17 units at risk, it announced on Tuesday, and load shedding was extended to Saturday morning at 5am. Eskom CFO Calib Cassim said at a briefing that the utility could soon reach a point where it can no longer afford to pay for the emergency diesel which keeps the turbines going, News24 reported.

Energy regulator Nersa has approved a 9.61 percent increase to Eskom from April 1, but it had applied for a 20.5 percent increase. Eskom’s debt stands at R390 billion and is only due for restructuring by 2024.

Municipalities add an additional surcharge (although they pay a slightly lower tariff for bulk purchases), which means that, come July, households already buckling will pay an energy tariff that is double the current inflation rate.

The SA Reserve Bank has indicated that it will increase interest rates to offset inflationary pressures, but this could push many households to the brink. Small businesses employ the highest proportion of South Africans and load shedding takes an enormous toll, as many readers told Daily Maverick.

Most small businesses use generators to keep going during power cuts. But the cost of keeping generators running is set to rise as the consequences of Russia’s war are felt across the world.

Eskom’s scheduled power cuts were more numerous in 2021 than ever before, and it warned that the high number of unscheduled power outages would have an impact on essential maintenance work. — DM