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Between July and December last year, the Shoprite Group spent an “additional” R560 million on diesel for generators, it says, “in order to trade uninterrupted during load shedding stages five and six”.
Load shedding reached a peak of Stage 5 on approximately 15 days and a peak of Stage 6 on 13 days during the second half of 2022. A peak of Stage 4 was implemented on 42 days in the six months.
This is an astonishingly big number — more than half a billion rand. By comparison, the electricity and water bill across the group was R3,8 billion in its last financial year.
So, maybe, R3 billion of that was in SA … And, say, somewhere between R2 billion and R2,5 billion of that was for electricity (the rest for water). Suddenly, that R560 million looks tear-inducing.
At Stage 6, power cuts can total as much as 12 hours in a 24-hour cycle. On days where Stage 6 is in place, stores could easily be without power for more than 50 percent (six hours) of the trading day.
But the generators need to run overnight too to ensure fridges and freezers stay running.
This is why the costs are so astronomical — generator power will easily cost double what one would pay Eskom or a municipality.
But the R560 million diesel bill for H1 ought not to have been a surprise to the market. On a call to update the market on first quarter trading, CEO Pieter Engelbrecht said that Stage 2 load shedding was “in the base”.
The retailer, like many other businesses, has learnt to deal with these short, infrequent cuts in power.
But, Engelbrecht pointed out, at “Stage 5 and up we run at R100 million a month” to run generators. — Moneyweb
Online Reporter