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South Africa is teetering on the brink of its most severe power cuts yet, just two months after the government announced emergency measures to try and end intermittent outages, prompting President Cyril Ramaphosa to cut short an overseas trip to oversee the response to the crisis.
State power utility Eskom, which provides the bulk of the nation’s electricity, began cutting 6 000 megawatts from the national grid over the weekend — equivalent to the most on record — to prevent the collapse of the national grid and its executives warned there was a risk the situation could deteriorate further. The rand weakened to a two-year low against the dollar on Monday, while shares of mining and manufacturing companies slumped.
“The situation will almost definitely get worse,” with no immediate signs of substantial new capacity being added to the grid, said Hilton Trollip, an energy research consultant at the University of Cape Town.
Eskom is struggling to meet electricity demand because its old and poorly maintained power stations continually break down, and the nation has been subjected to rolling blackouts since 2008. There have been blackouts for eight straight months this year.
Ramaphosa, who is in the UK attending Queen Elizabeth II’s funeral, decided to skip a planned address to the United Nations General
Assembly and head home instead after holding a virtual briefing with cabinet ministers and officials, according to his spokesman Vincent Magwenya. It’s the second time he’s had to curtail an overseas visit to respond to the energy crisis — he cut short a visit to Egypt in late 2019, just five months after he was elected president.
While Ramaphosa announced plans two months ago to increase Eskom’s maintenance budget to improve its plants’ reliability and enable it to buy more surplus power from private producers, those measures largely focused on longer-term solutions and haven’t made a tangible difference so far. An earlier plan to buy emergency power from producers has faced ongoing delays, with only 150 megawatts of capacity from private projects by developer Scatec ASA forging ahead.
The latest power cuts have “come at the worst possible time” as financing conditions are tightening significantly across the globe, economists at Rand Merchant Bank said in a note to clients. -Bloomberg
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