Eskom Board Member Says South Africa at Risk of Power Outages
Eskom Says South Africa on Brink of Further Power Outages
(Bloomberg) -- An acceleration in economic growth in South Africa could trigger power cuts, with state utility Eskom Holdings SOC Ltd.’s fragile generation system unable to respond to increased demand for electricity.
The energy availability of Eskom’s generation fleet is supposed to be as high as 80%, but is currently as low as 69%, and even a 0.1% rise in gross domestic product could result in outages, Nelisiwe Magubane, an Eskom board member, said at an event organized by research company Afriforesight in Johannesburg on Wednesday.
“We must make sure energy is available so the economy can grow, we can’t have a situation where energy is constraining the economy,” Magubane said in an interview. “There will be outages unless there is something that gets done around emergency procurement of power.”
The state-owned utility, which supplies about 95% of South Africa’s power, has a mountain of debt and is reliant on government bailouts to remain solvent. It is also contending with operational issues -- most of its power stations are nearing retirement age and haven’t been properly maintained, while the construction of two new plants are running years behind schedule and way over budget.
‘Relatively Stable’
“There have been some signs of improvement,” Magubane said. “Maintenance now is better planned, it’s also relatively stable.’’
South Africa has experienced intermittent power outages -- known locally as load shedding -- since late 2005, a measure Eskom said was needed to prevent the national grid from collapsing. Outages have eased over recent months largely due to the poor performance of the economy. Gross domestic product slumped an annualized 3.2% in the first quarter, the biggest contraction in a decade.
“We haven’t seen load shedding because demand is going south,” said Mike Rossouw, an independent energy adviser. “If demand picks up tomorrow you will be seeing load shedding every day.”
Magubane said Eskom had hired recruitment company Signium Africa to help the utility find its next chief executive officer, and a shortlist of candidates should be drawn up within the next two weeks.
Phakamani Hadebe vacated the post at the end of last month and Chairman Jabu Mabuza is standing in until a permanent appointment is made.
The new CEO will work closely with Chief Restructuring Officer Freeman Nomvalo, who was appointed last month, and is expected to oversee the process of splitting Eskom into generation, transmission and distribution units, according to Magubane. The new units are expected to be established within six to eight months and their boards put in place with clear performance indicators, she said.
--With assistance from Pauline Bax.
To contact the reporters on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net;Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net
To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Mike Cohen, Alastair Reed
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