South Africa Hit by Power Cuts Even After Maintenance Boosted

South Africa’s national power utility started rolling power cuts Friday for the first time in four months, even after a slump in electricity demand related to the coronavirus lockdown allowed the indebted company to boost maintenance.

As a cold spell rolls across South Africa, electricity demand has risen. At the same time a series of breakdowns overnight at Eskom Holdings SOC Ltd. have pushed the amount of generation capacity that’s out of service up by an additional 3,000 megawatts. The utility imposed cuts equivalent to 2,000 megawatts from noon local time and said it may continue over the weekend.

The power cuts will further hinder the recovery of an economy that was already in recession before the coronavirus outbreak and is now forecast by the Treasury to contract 7.2% this year. The last time Eskom implemented so-called loadshedding was two weeks before the March 27 start of a strict nationwide lockdown to curb the spread of the virus. Over the last two days the company has only managed to avoid power cuts for residential areas by asking industrial users to reduce their consumption.

“It means now that we are likely going to see a much more prolonged and gradual growth recovery, Mpho Molopyane, an economist at FirstRand Group Ltd.’s Rand Merchant Bank, said by phone. “This puts further downside risks to the growth forecasts for this year and also the the growth forecasts for next year.”

The breakdowns also jeopardize a target set by Eskom Chief Executive Officer Andre de Ruyter to have just three days of power cuts this winter. The country has suffered intermittently from power outages since 2008.

Eskom has a debt burden of 450 billion rand ($26.6 billion) and is unable to meet its running costs.

©2020 Bloomberg L.P.

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