SA Property Owners Association urges swift action from new electricity minister

The SA Property Owners Association (Sapoa), which represents 90% of commercial property owners in the country, has welcomed the appointment of Kgosientsho Ramokgopa as minister of electricity, but urged the government to move swiftly in resolving the energy crisis.

The cost of diesel is eroding revenue and causing financial strain for commercial property owners, CEO Neil Gopal told Business Day on Tuesday after the association released the results of a member survey on the impact of load-shedding.

“Not all companies are affected in the same manner. Some companies own and manage only retail, others only offices and some a combination of these plus warehousing/industrial complexes,” Gopal said.

In the survey, which was conducted two weeks ago, members say that unless load-shedding is ended, rental income will come under pressure as tenants cannot afford the additional costs associated with diesel-powered backup generators.

They say standby generators aren’t supposed to run as often as they presently are and will need to be replaced at huge cost, which landlords can ill afford.

“The harsh reality is that ongoing generator usage is unsustainable at higher stages of load-shedding, as higher diesel and maintenance costs cut into capital and maintenance budgets,” Gopal said.

Eskom, which is struggling to keep the lights on as its fleet of old and poorly maintained coal-fired plants suffer repeated breakdowns, has said load-shedding is inevitable for the next two years because of the persistent shortfall in generation capacity, estimated at between 4,000MW and 6,000MW.

The cost of daily blackouts on the economy as a whole was laid bare earlier on Tuesday when Stats SA reported that GDP contracted by 1.3% in the fourth quarter — far worse than expected and the sharpest decline since the third quarter of 2021 during the height of the coronavirus pandemic.

According the Sapoa survey, shopping centres were spending between R500,000 and R1m a month in additional fuel costs to run generators. Industrial logistics were spending between R100,000 and R500,000 over the same period, while the commercial office market spent about R100,000.

Gopal said the commercial property industry can potentially deliver between “500MW to 1,000MW per annum, giving us anywhere between 7GW to 9GW by 2035”.

 “This highlights the urgency of ensuring that all possible policy and regulatory steps have to been taken to enable the rapid rollout of solar projects by the commercial property industry.”

The intensifying energy crisis has been a further blow to the industry, which is still recovering from the pandemic.

Members also made a host of proposals, which they say will help them manage load-shedding. They include:

• listing Eskom on the JSE with the government assuming its legacy debt and retaining a non-controlling 20% stake;
• forgoing taxes on all solar equipment and generators; and 
• tax breaks for companies installing inverters and solar panels.

mahlangua@businesslive.co.za