South African power cuts to last till Sunday, Eskom

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A shopkeeper waits for customers in his candlelit fast food store during a load shedding electricity blackout in Cape Town April 15, 2015. South African power utility Eskom expanded rolling blackouts for a second straight day to the “Stage Three” level on Wednesday, meaning it needs to cut 4,000 megawatts from household and industrial consumers to prevent a grid collapse. REUTERS/Mike Hutchings TPX IMAGES OF THE DAY

South Africa’s struggling state power firm Eskom said power cuts would continue until Sunday and warned that further cuts were likely next week, underscoring the risks to businesses in Africa’s most industrialised economy.

Eskom supplies more than 90 percent of South Africa’s power but has suffered repeated faults at its fleet of mainly coal-fired power stations.

It is laden with 420 billion rand ($29 billion) of debt and does not generate enough profit to meet its debt-service costs.

Its problems are a big challenge for President Cyril Ramaphosa as they are stymieing efforts to haul the economy out of a slump before a national election in May.

The company cut 2,000 megawatts of electricity from the national grid on a rotational basis on Friday, the same amount of cuts as on Thursday.

More than a quarter of Eskom’s 45,000 MW generating capacity has been offline because of unplanned power plant outages, including at faulty new mega plant Kusile.

Eskom said in a statement that the extension of the power cuts until Sunday was because it needed to manage its diesel and water reserves, which it uses when it cannot generate sufficient power from its coal plants.

If they drag on into the southern hemisphere winter, which begins in earnest in June, it could exacerbate hardships for millions of South Africans living in poverty.

Ramaphosa’s government has promised to inject 23 billion rand a year over the next three years to shore up Eskom’s finances. It has also asked a team of experts to come up with a plan to fix Eskom’s creaking coal plants.

Analysts say power cuts, which have happened in several rounds since June last year, are one of the reasons why business confidence has slumped in recent months.

The economy grew by just 0.8 percent last year. That is insufficient to meaningfully reduce poverty or South Africa’s high unemployment rate of around 27 percent.

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