Eskom Moves Turnaround Strategy to 2019 as Power Cuts Begin

(Bloomberg) -- South Africa’s state-owned power utility expects to launch its turnaround strategy in 2019 after at least two delays of its much-anticipated recovery plan, as power cuts blanket the nation.

The power company’s long-term strategy has been approved by the board, it said in an emailed response to questions Saturday. The plan is seen being implemented “in the new year,” it added.

Eskom Holdings SOC Ltd. announced a third day of scheduled power outages on Saturday due to inadequate energy availability. Financial constraints limited maintenance amid unplanned outages from an aging fleet of power stations. The controlled blackouts threaten South Africa’s economy as President Cyril Ramaphosa attempts to draw investment to help boost growth.

A new board and leadership at Eskom was intended to turn the business around. The utility took steps to root out corruption and encourage whistle-blowers to come forward.

Eskom’s debt has soared to 419 billion rand ($30.6 billion), while sales volumes have dropped. Its finances and that of some other state-owned companies have deteriorated to the extent that they now pose a significant risk to the country’s financial system, South Africa’s auditor-general said on Nov. 21.

The utility announced stage one rotational power cuts on Saturday and later said it was going to the next of the blackouts, which will cut off 2,000 megawatts nationally between 16:00 and 22:00 hours.

“This is due to a further shortage of generation as a result of units that have not returned to service as expected and a loss of an additional unit,” Eskom said in an emailed statement. The power cuts are are happening “as a measure of last resort to protect the power system from a total collapse or blackout.”

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