Johannesburg’s City Power, the utility that supplies electricity to the largest metropolitan area in Africa, is facing a financial and operational crisis that threatens to worsen the power situation in South Africa.
According to its latest quarterly report, City Power’s overdraft increased to R9.1 billion ($485 million) by the end of September 2022, up from R2.4 billion ($128 million) in June. Its electricity sales declined by 10% quarter-on-quarter, while its bad debts rose by 31% year-on-year to R8.5 billion.Embed from Getty Images
The utility also reported a deficit of R1.4 billion, or a monthly loss of R450 million, and a negative cash liquid ratio of -197%. Its liabilities exceeded its assets by almost R7 billion.
City Power’s chairperson Douglas Gibson said that the utility’s infrastructure was “aged” and “under siege” by theft and vandalism. He added that the network was poorly designed and maintained, leading to longer outage restoration times.
The utility’s chief executive Tshifularo Mashava said that 60 of its power transformers had reached the end of their useful life, but the company could only afford to refurbish three of them a year.
In some areas, such as Sandton, which is known as “Africa’s richest square mile”, engineers had to resort to makeshift solutions to cope with the demand, such as connecting four suburbs to a single supply line. As a result, residents suffered frequent and prolonged blackouts, ranging from six to 16 hours a day.Embed from Getty Images
The deterioration of City Power, along with Eskom’s ongoing load shedding, has had a negative impact on businesses and households across Johannesburg. Denis Juru, an entrepreneur and chairperson of the South Africa International Cross Border Traders Association, said that the power cuts had disrupted production, trade and transport.
He said that many businesses had to invest in alternative sources of energy, such as generators and solar panels, which increased their costs and reduced their competitiveness.
Juru also warned that if South Africa experienced a countrywide blackout like Botswana did on Monday night, it would be catastrophic for the economy and society. He said that Botswana was able to restore power within hours, but South Africa would not be able to do so because of its larger and more complex grid.
He urged the government and the power utilities to urgently address the root causes of the power crisis, such as corruption, mismanagement, lack of investment and maintenance, and policy uncertainty.
He also called for more cooperation and integration among the countries in the region, such as Botswana, Namibia and Mozambique, to share their surplus electricity and diversify their energy sources.