Eskom started a second day of power cuts on Monday, creating uncertainty that endangers businesses that are highly dependent on the utility, a group representing the biggest electricity users said.
President Cyril Ramaphosa has initiated a split of the state-owned electric company that is struggling under R419-billion of debt and declining demand. A breakup into generation, distribution and transmission businesses will enable each unit to better manage costs and make it easier to raise funding. Rating companies see Eskom as a key risk to the economy, with blackouts and huge debt a drag on growth prospects.
“We’re going to see companies close in the smelting industry,” said Shaun Nel, a spokesman for the Energy Intensive Users Group of South Africa, whose members consume more than 40% of the nation’s power and include Anglo American. Between already-high tariffs and the spectre of more supply cuts, the victims will be “small foundries and smelters that shut down and never come back”, he said.
Eskom implemented stage-two rotational power cuts throughout the country on Monday. That involves taking 2GW of demand out of the system to prevent a complete collapse of the grid. While generation units have returned to service, others have continued to trip, according to the utility.
The country is Africa’s biggest steel producer, and Eskom first throttles supply to industrial customers before cutting retail consumers.
Availability of the generation fleet, which comprises ageing units and new plants struggling with defects, is expected to decline through to March before starting a slow recovery, Eskom said in a November presentation. — Reported by Paul Burkhardt, (c) 2019 Bloomberg LP