South Africa’s Eskom Resumes Power Cuts as New CEO Starts

(Bloomberg) -- South African power utility Eskom Holdings SOC Ltd., which generates about 95% of the country’s electricity, extended power cuts that started on Jan. 4 into a second day after a conveyor belt failure at its Medupi plant -- just as Andre de Ruyter officially takes over as head of the cash-strapped company.

Eskom initially extended stage 2 load-shedding, the local term for scheduled blackouts, through Monday at 5 a.m., the utility said Sunday in an emailed statement. That means the company is removing 2,000 megawatts from the national grid. In a later statement it said it would end power cuts earlier than anticipated at 11 p.m. and doesn’t expect outages tomorrow.

The resumption of power cuts, which have stunted growth in Africa’s most-industrialized economy, illustrates the challenge facing De Ruyter, who left packaging company Nampak Ltd. earlier than originally scheduled to start at Eskom following an urgent request from cabinet.

“Owing to inadequate maintenance over a number of years, the system remains vulnerable to unplanned outages,” Eskom said in its statement. De Ruyter, who is expected to begin formal duties at the company on Monday -- earlier than the originally planned start date of Jan. 15 -- is tasked with turning around the debt-laden power utility, which has been described by Goldman Sachs Group Inc. as the biggest threat to South Africa’s economy.

The Medupi plant is one of two massive coal stations under construction that are years behind schedule. The new builds, which are costing double the initial budget, have been found to be defective, while the remainder of Eskom’s power station fleet is poorly maintained and prone to unplanned outages.

Businesses return from a holiday break by mid-January, increasing the demand for electricity. “The system remains constrained and vulnerable, and as such load-shedding stage 2 will unfortunately have to continue,” Eskom said.

(A previous version of this story corrected the full name of Goldman Sachs in the third paragraph.)

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: Alastair Reed at areed12@bloomberg.net, Cecile Vannucci, Rene Vollgraaff

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