South Africa

Volkswagen says power shortages threaten South African expansion


Volkswagen’s top executive in South Africa said uncertainty about power supply is limiting the German carmaker’s ability to expand in the country. 

While the power cuts that have plagued South Africa since 2008 have been on a two-month hiatus, Volkswagen’s local head said no long-term solution has been presented to carmakers despite Electricity Minister Kgosientsho Ramokgopa’s tour of plants. 

“The overall power situation brings South Africa to an uncompetitive situation in the automotive industry,” Martina Biene, chairwoman and managing director of Volkswagen South Africa, said in an interview in Gqeberha, close to VW’s factory.

“Isuzu and ourselves and the Ford engine plant, we are affected by load shedding,” she said, using a local term for power outages. 

The uncertainty over electricity supply, caused by the poor maintenance of the state power utility’s coal-fired plants, increases the cost of running the facility compared with VW’s more than 100 sites across the world, making it hard to argue for additional investment, she said. 

“My biggest opposition is 113 other VW plants,” she said. 

Fed well

While Biene welcomed the current lull in outages, she said the 165,000-car-per-year plant in Kariega, in the Eastern Cape province, had already spent 130 million rand ($7 million) on generators.

The factory, which will soon become the company’s sole producer globally of Polo hatchbacks, needs 14 megawatts of power to run. 

The visit by the minister had yielded no results despite a discussion on a number of potential solutions, she said. Calls to the minister’s spokespeople and emails to his office by Bloomberg weren’t answered.

Power is “our biggest obstacle,” Biene said in an earlier speech. “He came, we fed him well, its great people are accessible but there is no outcome.”


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