Construction sector’s giant Eskom headache
ESKOM isn’t just plunging the country into darkness at rolling intervals, its plight is causing the construction industry to bleed badly.
Elsie Snyman, analyst for Industry Insight, says Eskom’s inability to spend on renewable energy projects — seen as a lifeline for the construction sector — means many of these have ground to a halt. “Connecting some of these projects onto the grid is not going so well because of Eskom’s financial problems,” she says.
Eskom is one of the construction industry’s biggest clients: when it runs out of money the consequences for the industry are dire, she says.
The renewable energy sector needs to know that once it has developed a project, it can quickly get connected to the grid and begin earning an income for investors.
“There is some uncertainty about how Eskom will deal with its own financial issues,” Snyman says. “Unless the renewable energy investors get clarity soon, the . . . projects will be delayed.”
This will be disastrous for the engineering firms. “Renewable energy projects are one of the construction industry’s highlights, and one of the few examples where we are getting it right.”
If these are delayed, because of Eskom, the consequences will be felt far beyond the construction sector.
It is critical that Eskom comes to the party, she says, because “if those projects also fall off [in addition to the disastrous Medupi and Kusile power station projects], nothing is going to be done in terms of energy. So it is absolutely essential.”
The real focus for the engineering industry however, is on transportrelated projects, where Transnet is its biggest client — such as roads, rail, harbours and ports.
The industry has a steady 28% of earnings from transport, but this has not grown as expected given all the talk about prioritising infrastructure.
Many of the projects, such as Durban’s dig-out port, are “very real projects but have a very long time frame for implementation”. This is a polite way of saying that nothing is going to happen any time soon given the government’s mounting financial “constraints”.
“Projects are delayed until the government is able to get its financial house in order.”