Power crisis stalls engineering investment, survey shows

The Steel & Engineering Industries Federation of Southern Africa (Seifsa) warns that the electricity crisis is stalling investment in the steel, metal and engineering sector.

Seifsa said this emerged from a recent industry survey.

About 10% of the sector, surveyed from February 2022 for twelve months, found that 42.6% of companies had cancelled a collective R2.64bn in investment and expansion plans owing to the uncertainty presented by the electricity crisis. The investments had the potential of creating 1 620 new jobs. 

BusinessLIVE reports that above-inflation-rate increases in electricity tariffs and load-shedding have pushed the industry body to further revise its forecast of a reduction of 2.2% to 5.3% in production, for 2023.

Seifsa’s survey found that 79.2% of companies indicated they have had to install alternative electricity sources in the past 12 months, at a combined cost of R985m. 

A third of the sample indicated they were working short-time due to the electricity crisis. An outcome of even greater concern was that half of the companies implementing short-time had already retrenched 9,400 people.

Seifsa COO Tafadzwa Chibanguza is reported as saying: ‘The crisis has been particularly damaging on the metals and engineering sector, a sector which is the backbone of industrialisation and to which electricity, particularly baseload electricity, is fundamental to its survival.

‘The long-term implications of this energy crisis to the future prospects of the sector are devastating.’

[Image: Emir Krasnić from Pixabay]