South Africa

South Africa must plan for a total blackout and stage 8 load-shedding

There is a very low probability of a total blackout occurring in South Africa. However, it will have catastrophic effects on the country, and the government and businesses must, therefore, plan for it.

This is according to the managing director of Intellidex, Peter Attard Montalto, who made these comments on 702’s The Money Show.

Attard Montalto said there was previously a massive underestimation of the probability of a total blackout, but now that possibility is overestimated.

The “probability is in the region of the low percentages” and will not occur in the ordinary course of operation – it will only happen if something goes dramatically wrong.

However, while there is a very low probability of a total blackout, there is “an extreme risk” that it will significantly impact South Africa. Thus, it is necessary to plan for it.

According to Attard Montalto, there has not been enough planning for a total blackout by Eskom, the government, or the private sector.

Eskom is legally obligated to have plans for a total blackout because of the potentially catastrophic outcomes.

Yet, there is a lack of coordination between Eskom, the government, and the private sector about these plans for avoiding a blackout or its fallout.

He said there has “not been the level of crisis planning you need to have” to deal with such an event.

Attard Montalto added that South Africa is highly likely to experience stage 8 load-shedding in winter.

“It requires more planning, particularly around the diesel supply chain. It is a big issue during winter, and the diesel supply chain may be unable to cope,” he said.

Apart from the low-probability blackout event, the country must also focus on the high probability of higher load-shedding stages with moderately bad outcomes.

Managing director at Intellidex, Peter Attard Montalto

Some sectors, particularly food retailers and banks, are ahead of the curve in this regard and, in general, the “resilience of the economy has been remarkable”.

Individuals and companies have adapted to the current realities, although at a considerable cost to businesses and consumers.

For instance, Standard Bank has partnered with local industry, the South African Reserve Bank (SARB), and the broader authorities to prepare for this scenario.

Standard Bank CEO Sim Tshabalala said a total grid collapse is a possible scenario with a low probability.

However, because of the enormous impact of such an event, they have plans and understand what needs to be done when a total grid collapse occurs.

Through the Financial Sector Contingency Forum (FSCF), the South African Reserve Bank said it was preparing contingencies for a national grid failure.

“As part of these preparations, the FSCF has been in regular contact with Eskom, the petroleum industry and the telecommunications industry,” the SARB said.

Many other South African telecommunications, retail, mining and financial services companies have also said they have been preparing for a total grid collapse.

As part of their total blackout preparations, MTN has set up “war rooms” to ensure critical sites remain operational, and the JSE stocked up on diesel to run its operations for seven days.

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