The losses to the South African economy tallied R1Bn over the Valentines weekend alone, after 14 hours of Stage-2 load-shedding on Saturday 14th February, 4 hours of Stage-2 load-shedding on Sunday morning 15th February, and 10 hours of Stage 1 load-shedding on that Sunday afternoon. Since the Majuba silo collapse in early November, total load-shedding losses to the SA economy have topped an astonishing R12 billion. The losses so far for the 2015 calendar year are R4.6 billion.
According to ESKOM, Stage-1 load-shedding still supplies 96% of the country with electricity, whilst Stage 2 load shedding still supplies 93% of the country, and Stage-3 load shedding still supplies 86% of the country with electricity. We can thus deduce that stage-1 load-shedding affects 4% of users, stage-2 affects 7% of users, and stage-3 affects 14% of all users.
The SA economy produced R960 billion in the 90 days of the 3rd quarter of 2014, or R10.7 billion per day. Given that 18 hours of a working day are responsible for the bulk of economic activities (6am to midnight) we can equate this to R592 million per hour. Assuming a direct correlation between GDP and electricity supply, stage-1 load-shedding costs us 4% of our output or 4/100*R592=R23.68 million per hour. Similarly, stage-2 load shedding costs us R41.44 million per hour and stage-3 load shedding costs us R82.88 million per hour.
We can use these rough estimates of hourly losses to the SA economy together with actual hours of load-shedding to calculate cumulative losses since the Majuba silo collapse, as shown in the weekly chart we maintain below:
There are other estimates of load-shedding losses. Energy expert Chris Yelland uses the “costs of unserved energy” taken from the Integrated Resources Development plan of R100 per kWh which equates to Stage-1 losses around R100 million per hour. This results in losses of over R56 billion since November. Economist Mike Schussler estimates Stage-1 losses to be around R30 million per hour which equates to losses of R17 billion since November. Our estimates seem to be the most conservative here, but are very close to what Mike Schussler calculated. Our calculations are of course reflecting a “business-as-usual loss” but the longer load-shedding persists, the more insidious the effects become. Loss of confidence and the resulting drop in investment come to mind. The longer the load shedding situation persists, the more we will start trending toward the Yellen estimates.
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