Fearing three-week blackout, banks ramp up contingency plans

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As South Africa moves towards stage eight load-shedding, financial institutions are working on implementing contingency plans to keep banks operational should a full-scale blackout occur.

The South African Reserve Bank and Eskom have been locked in meetings to determine the possible risks involved in a blackout, and how to navigate a temporary grid collapse, should one take place. 

Banks have implemented contingency plans for load-shedding to ensure that its systems continue to work. These plans are similar to those that are being worked on for a total blackout. 

Should a total blackout occur, in the best case scenario, it would take six to 14 days to restart the power grid and in the worst case scenario, three to four weeks to repair the grid, according to Eskom. 

Kuben Naidoo, the Reserve Bank’s deputy governor, told the Mail & Guardian that the central bank had met Eskom, telecommunication companies, banks and their payment departments to fine-tune ways to navigate a total blackout.

“If you had asked me a month ago, I would have probably said that in the event of a complete grid shutdown, there would be almost no transactions,” Naidoo said. 

The Reserve Bank has, since 2015, had a contingency plan and laws ready to be implemented in a time of crisis. They were drawn up eight years ago as a precaution, but now it believes a grid collapse is likely. 

To find out what plans banks have in place, the M&G asked Nedbank, Absa and Standard Bank what steps they were taking in the event of a blackout.

Nedbank spokesperson Aimee Viljoen said the bank had, during load-shedding, implemented its contingency plan. 

The plan includes connecting its ATMs to the bank’s backup power during an outage to ensure that customers can still do their banking activities. Nedbank also wants to put in place backup power at 1 350 sites by the end of the third quarter.

“As a business, we are well-prepared for load-shedding and currently have generators and alternative solutions in place to limit the impact on our clients and our business. About 90.3% of the branches have backup power and are able to carry on with operations, Viljoen said. “Installation of a central battery system will be made during the first half of 2023 at the branches that currently don’t have backup power.

She said clients are also assisted through digital and call centre channels and, if need be, are redirected to the closest alternative branch. The bank also offers a few alternative payment methods such as QR code payments. 

All Nedbank corporate offices have a backup electricity supply and operate normally during load-shedding.

Viljoen added that the bank has remained resilient in ensuring continuous operations since the increased frequency of load-shedding.

Standard Bank spokesperson Ross Linstrom said Standard Bank encouraged its customers to make use of the digital platform to ensure they stay connected.

“At all times, a viable and convenient alternative banking channel is and has been available to customers should an ATM not be available due to extended load-shedding, as an example.

Linstrom said Standard Bank’s ATMs are equipped with backup power facilities that provide services to customers even when there is load-shedding.

But, he added, because of the nature and extent of load-shedding at times, certain ATMs may not be available until their power backup systems are replenished.

Standard Bank, which is the country’s biggest bank by revenue and customers, had a series of significant outages of digital banking that occurred from April 2021 to May 2022. At least 10 major service disruptions occurred, most of which resulted in hours-long downtime of its mobile banking app and internet banking.

Absa’s managing executive, Tshiwela Mhlantla, said that as part of its contingency plan, the bank on Monday launched a card tap-and-go capability to reduce the time taken at an ATM.

“The capability is expected to reduce transaction time at the ATM by up to 12 seconds on average and potentially deter incidents of card theft at ATMs, which is an industry wide trend. Further to this, the capability may assist to diminish incidences of card retention during ATM hardware or power failures and card jamming.”

Mhlantla said the power supply at the majority of Absa’s branches and branch ATMs are backed up by alternative power sources, to mitigate the effect of an outage.

“We are deploying alternative power sources to support our standalone ATMs over the coming months and a process to upgrade our ATM network with enhanced energy-efficient technology is under way.

Mhlantla added that Absa participates in industry initiatives aimed at managing the effect of load-shedding and extended power outages on the financial services industry.

According to a source in Eskom, the meeting between the Reserve Bank and the electricity utility was prompted by a warning that the power system was struggling, which prompted a call on financial institutions and big companies to prepare themselves for a regional blackout in July — when demand for electricity is highest — which would take three weeks to fix. 

In its financial stability review released in February, the Reserve Bank said: “Insufficient and unreliable electricity supply is likely to threaten the viability of some corporations, especially small and medium-sized enterprises, for the foreseeable future, with losses potentially spilling over into the financial sector.”

The performance of Eskom’s fleet of mostly coal-fired stations has deteriorated, resulting in regular blackouts.

The Reserve Bank estimated that load-shedding will contribute to the downgrade of economic growth this year.

Eskom has previously confirmed that the amount of load-shedding in 2023 will exceed that in 2022, because of significantly more hours of stage six rolling blackouts.

Eskom has repeatedly said that a total system collapse is unlikely to occur. Last week Electricity Minister Kgosientsho Ramokgopa said the utility had improved its energy availability factor to 55% from 53% in May.

In an interview on Wednesday, he reiterated that it was technically impossible to end rolling power cuts by the end of this year, “but we will be at substantially lower stages of load-shedding”.

Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa.