South Africa’s Eskom Deepens Power Cuts to Unprecedented Level

Feb 22, 2023 by Bloomberg

South Africa is experiencing an unprecedented level of power blackouts.

Eskom Holdings SOC Ltd. cut 7,045 megawatts from the grid — a move to prevent a total shutdown of the national grid — spokesman Sikonathi Mantshantsha said in a Tweet on Tuesday. He confirmed that the intensity of power cuts increased to the so-called Stage 7 of loadshedding, as the practice is known locally. The utility earlier had only indicated it was implementing Stage 6, where it removes a corresponding 6,000 megawatts.

The record rationing is a severe blow to Africa’s most-industrialized economy, which is struggling to rebound from the coronavirus pandemic and rebuild battered business confidence. Eskom has subjected the country to power outages every day this year. The South African Reserve Bank estimates the outages cost the nation as much as 899 million rand ($49 million) per day. 

Finance Minister Enoch Godongwana is set to make an announcement about the transfer of Eskom’s about 400 billion rand debt when he delivers his budget speech on Wednesday. Finances have weighed on the company that’s had difficulty maintaining funds to buy diesel.

Eskom, which supplies most of South Africa’s power from coal-fired plants, has been implementing rolling blackouts since 2008 because it can’t meet demand. Less than half of the utility’s generation capacity is available, two newly built coal-fired plants have also proven unreliable and other defective generating units have had to be taken off-line for repairs. The government has declared a state of disaster due to its energy crisis.

Economists polled by Bloomberg predict the economy shrank in the final quarter of 2022 and that it’s on course to contract in the three months through March largely because of the sustained power cuts. 

Plans to add capacity from private producers have been dogged by delays and legal disputes. Eskom says the country needs an additional 4,000 to 6,000 megawatts of generating capacity to ensure a secure energy supply. 

The so-called energy availability factor of Eskom’s fleet has been declining every year since 2017, according to the Council for Scientific and Industrial Research.

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©2023 Bloomberg L.P.

By Paul Burkhardt , Matthew Hill

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