While the hospitality industry continues to grapple with blackouts and a huge diesel bill, 13 companies in the sector closed shut in January.
This is according to Federated Hospitality Association of South Africa (Fedhasa) who hosted an energy summit on Friday to unpack the effects of the energy crisis on the sector.
“South Africa recorded 81 business liquidations in January, down 32.5% from the 120 businesses that shut their doors in January 2022. Trade, catering and accommodation companies saw 13 liquidations,” said Lee-Anne Singer, Fedhasa Cape chairperson.
Singer also said that load shedding was eating into tourism profits as the sector was looking to bounce back from Covid-19.
“On December 27, South Africa passed 200 days of power cuts, equalling 55% of all the days in the year. The industry lost a lot of money and a lot of the people in the sector’s income had to be spent on fuel for generators,” she said.
Last year, South Africans experienced more than 192 000 minutes of power cuts – 200% more than any other year.
Fedhasa Cape board member, Neil Hughes, told Weekend Argus that his 40-bedroom hotel, San Lameer Resort Hotel and Spa, spent roughly R1 million on diesel over the past year.
“Load shedding is a major discomfort to operation from a utility’s costs perspective,” Hughes said.
“I am not even talking about equipment that gets damaged by load shedding, it also affects our staff… there have been some casualties in this war. We had to make certain fixed (employment) contracts to be flexible and had to let some people go unfortunately,” he said.
He accused government of “not doing anything to assist us”.
MEC for Finance and Economic Opportunities, Mireille Wenger, said she was on a mission to help alleviate the crisis.
"We know that much needs to be done. Every barrier that stands in your way needs to be removed," said Wenger.
"Your enormous potential to contribute to growth should only be assisted – and never held back, as is frustratingly too often the case. That is why addressing the energy crisis that South Africa faces today is the Western Cape Government’s single biggest priority, as Premier (Alan) Winde made clear in his state of the province address," she said.
“We are taking urgent steps now to ensure we build our energy independence as quickly as possible."
The province's municipal energy resilience (MER) Initiative, Wenger said, continued to make strides in unlocking energy opportunities by enabling municipalities, businesses, and households to generate, procure and sell power.
"A key component of the MER Initiative is to enable and unlock municipal independent power producer procurement (IPP) in candidate municipalities," she said.
Following a pre-feasibility analysis, Stellenbosch Municipality – as a candidates – will soon be supported with transaction advisory services to take the work from the pre-feasibility stage through to feasibility, procurement and contract finalisation.
Parallel to this process, a business case for a pooled buying mechanism is being developed, aimed at providing a lower risk and lower cost municipal IPP procurement solution to multiple Western Cape municipalities.
And to support municipal readiness, in the last year, the Western Cape Government has provided funding to 10 municipalities for 16 foundational energy studies, including the development and updating of electricity master plans and cost of supply studies.
"We are now also in the process of having standardised legal agreements drafted for the use of municipal grids in wheeling transactions," said Wenger.
Mossel Bay, Overstrand, and Bitou have completed their cost of supply studies and Stellenbosch, Cape Agulhas and Witzenberg continue to make progress towards completion.
At the end of January, in response to the very real risk to the health of citizens across the province, the Western Cape Government also released R88m in emergency funding to municipalities to procure generators, or alternative energy sources, to ensure municipalities can provide essential and basic water and sanitation services, to keep water and sewerage pump stations going.
Weekend Argus