Load Shedding impacts property sector
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Load shedding impacts property sector
19 Jan 2015
The South African Property Owners Association (SAPOA) is calling on South Africa’s commercial property owners to partner and work with Eskom in light of the current electricity supply constraints in the country.
While load shedding negatively impacted overall business production for several months in 2014, further load shedding is expected to continue in 2015, with the property sector, particularly retail, set to be affected. Image courtesy of Shutterstock.
This is according to Neil Gopal, Chief Executive Officer of SAPOA, who says while load shedding negatively impacted overall business production for several months in 2014, further load shedding is expected to continue in 2015, with the property sector, particularly retail, set to be affected.
At the end of last year, SAPOA urged Eskom to reassess its load shedding schedules in light of the harmful impact the power outages had on retailers during the valuable peak festive season trading times.
SAPOA is the official voice of the South African commercial property sector, which makes a significant contribution to the country’s economy. Its members control about 90% of all commercial property, with assets estimated at more than R400 billion in value. This includes the owners and managers of almost of all South Africa’s malls and shopping centres.
Gopal says retail and its related property sector, play powerful roles in South Africa’s consumer-driven economy. Load shedding has substantially inhibited the ability of retailers to trade optimally during the 2014 festive season - the most crucial few weeks of the year for their businesses. He says this stands to have far-reaching negative impacts for South Africans.
Furthermore, he says 2014 was a tough year for retail in South Africa, with consumers being hard-hit by the country’s weakened economy.
“Business giants like ABIL have failed, with adverse impacts for other sectors, like property. South African consumers and retailers face a gruelling road ahead, with a grim economic outlook that’s not likely to improve any time soon.”
This places many retail businesses in a fragile position; one that simply can’t stand up to the knock of losing all-important trade, he says.
Gopal says that lower turnovers and more retailer failures stand to undermine the economy, damage the property sector, escalate job losses and place South Africans in an even weaker position. Businesses in the retail chain are failing because they can’t manufacture, pack, trade and serve without electricity, he says.
At a recent high-level meeting, Eskom Chief Executive Officer Tshediso Matona informed stakeholders that one unexpected event at any of its power stations could propel the country to the total failure of the national electricity system, resulting in a national blackout that may take weeks to resolve.
Gopal says this alarming announcement could have dire consequences for the commercial property sector, thus SAPOA has engaged with Eskom and property players on the matter.
SAPOA met with shopping centre owners and several Eskom representatives on 10 December 2014 to discuss the way forward. Positively, Eskom has proposed a partnership programme that will help to increase the reserve margin and maintain a supply and demand balance on the national grid.
The Standby Generator Compensation Programme offers customers an opportunity to partner with Eskom in managing the current power supply constraints - 100MW worth of backup or standby generators is now being contracted to run at Eskom’s request during periods of high electricity demand.
Eskom will ask qualifying participants to run their generators and supply some, or all, of their own electricity requirements to assist in lowering the total electricity demand on the national grid. Participants will receive financial compensation for successful generation.
Gopal says while they urge Government and Eskom to deliver swift and effective solutions to the energy crisis, SAPOA hopes that property owners will participate in a collaborative effort to keep the lights on in 2015.
Author: Neil Gopal, Chief Executive Officer of SAPOA