South Africa Says It’s Got a Plan to Restore Power Stability

JOHANNESBURG (Capital Markets in Africa) – South Africa’s state-owned power company has a plan to restore reliability of supply over the short to medium term and will aim to avoid any more scheduled blackouts, according to the minister responsible.

The objective for Eskom Holdings SOC Ltd. remains predictable power supply, Public Enterprises Minister Pravin Gordhan told reporters on Wednesday. If rotating power cuts become necessary, the utility will aim to ensure that a maximum of 1,000 megawatts is cut, he said.

Productivity slowed in Africa’s most industrialized nation during 10 consecutive days of rotational power cuts last month. The blackouts were implemented to prevent a collapse of the entire grid caused by unplanned outages from aging plants and poor performance from new units that are defective. Electricity imports from Mozambique were also cut after a cyclone struck the neighboring country.

The government and Eskom now have a better understanding of the issues facing the utility, Gordhan said. Plans have been drawn up for the winter period, as well as for the next nine months.

Eskom is seen as a key risk to South Africa’s economy and a priority for the ruling African National Congress which faces presidential polls next month. The government in February approved a 69 billion-rand ($4.9 billion) bailout over three years to help rescue the utility.

The cost of Eskom’s newest stations, Medupi and Kusile, has ballooned to more than 300 billion rand, up from an original projection of 109.6 billion rand, and they have proved unreliable since being commissioned. The plant builds have driven the utility’s debt to over 419 billion rand.

Eskom investigated whether to finish Kusile, but decided it makes more sense to continue, chairman Jabu Mabuza said on Wednesday.

Source: Bloomberg Business News