South Africa Faces Blackout Risk After Protests and Sabotage

(Bloomberg) -- South Africa faces a high risk of rolling blackouts after protesting workers blocked access to facilities and sabotaged systems, the state power utility warned.

Loss-making Eskom Holdings SOC Ltd., which loses money despite generating more than 90 percent of the country’s electricity, has been flagged by ratings companies as a key risk to South Africa’s economy as it grapples with issues from insipid demand to unsustainable debt. Workers are protesting Eskom’s refusal to pay performance bonuses.

“We’ve so far lost quite a number of units” which will result in power outages during peak hours on Tuesday if they aren’t returned to service, spokesman Khulu Phasiwe said by phone. Many of Eskom’s offices have been emptied due to intimidation and threats, he said.

Police were called in Monday after at least four units were affected at sites including Koeberg, the nation’s only nuclear plant, according to Eskom. At the Matla plant, a conveyor belt typically used to feed coal, was cut, in what management suspected could be an act of sabotage. Coal trucking at some plants also stopped, creating shortages of the fuel, the utility said.

The National Union of Mineworkers, which represents the most employees of any labor group at Eskom, “participated in a peaceful protest” over Eskom’s refusal to pay a bonus and wasn’t responsible for sabotage, spokesman Livhuwani Mammburu said by phone.

Eskom offered to raise wages by as much as 7.5 percent annually after it was forced to introduce rolling blackouts last month when protesters blocked roads and attacked staff as wage talks broke down.

Still, the utility has stood firm on its refusal to pay bonuses, after reporting an annual loss of 2.3 billion rand ($174 million) last week. That stance amounts to an “act of war,” according to NUM. Legally, workers aren’t permitted to strike because the power producer is deemed to provide an essential service.

South Africa Faces Blackout Risk After Protests and Sabotage

Management hasn’t determined whether the outage at the country’s only nuclear plant -- a technical fault in one of the units that’s not in a sensitive area -- is connected to the protest, Phasiwe said. Still, ramping up a nuclear unit can take days and a coal-powered equivalent up to 8 hours, he said.

Eskom said last week that no bonus provision was raised as the utility missed its net profit target of 500 million rand. It also said financial constraints require a reduction in employee-benefit costs to keep the business sustainable.

Eskom and the unions will meet again on Aug. 3, the company said.

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