South Africa was hit by power cuts on Wednesday after a number of Eskom generating units broke down, highlighting the challenge facing President Cyril Ramaphosa in rescuing the state power firm.
Eskom said in a statement that it would cut 2 000 megawatts (MW) of power from 9 am local time (0700 GMT) until 11 pm (2100 GMT) on a rotational basis across the country, the first power cuts in around seven months.
The rand fell around 1% against the dollar as the news raised risks for the country’s weak economic outlook.
Eskom Chief Operating Officer Jan Oberholzer told state broadcaster SABC that the power system could be back to normal in a week’s time.
Eskom said more than 10 500 MW of its roughly 45 000 MW capacity was offline on Wednesday because of unplanned breakdowns.
Five generating units were unavailable because of boiler tube leaks, and a conveyer belt supplying coal to the Medupi power station had failed.
Due to a shortage of coal generation, Eskom’s supplies of water for its pumped storage and diesel for its open-cycle gas turbines had run low.
#PowerAlert Due to a shortage of capacity stage 2 loadshedding is to be implemented from 9 am to 11pm today. Media statement with more details to follow @CityPowerJhb @City_Ekurhuleni @CityTshwane @CityofJoburgZA @CityofCT @ewnupdates @SABCNewsOnline @IOL @eNCA @SAgovnews
— Eskom Hld SOC Ltd (@Eskom_SA) October 16, 2019
Eskom produces more than 90% of South Africa’s electricity but has been hobbled by technical faults at its fleet of mainly coal-fired power stations.
A financial crisis rooted in soaring expenditure, huge cost overruns on two mammoth power stations and years of low tariff awards resulted in a loss of more than R20 billion in the year to the end of March.
Ramaphosa has announced plans to split the utility into different units for generation, transmission and distribution to make it more efficient, but such change will take many years to implement.
The government has also pledged to provide a cash injection of R59 billion over the next two years, on top of R230 billion of bailouts spread over the next decade.
Eskom executives had achieved some improvements in plant performance earlier this year, but analysts say the company’s reserve margin had declined in recent weeks.
The latest power cuts come at a critical time for South Africa’s energy policy, as cabinet ministers prepare to debate the country’s long-term electricity generation plan this week.
Publishing that plan is seen as crucial to unlock sorely needed investment in power generation.
The government is also expected soon to unveil a new chief executive for Eskom after the previous CEO stepped down in July and publish a paper detailing further steps to reform the utility.
Focus on the IRP
In a statement released on Wednesday, Business Unity SA (Busa) says it advocates for an expedited gazetting of a least-cost, least-regret Integrated Resource Plan (IRP) option “that identifies the optimal energy sources required to power the economy and sustain and create jobs.” This follows widespread reporting that the IRP is to be tabled before Cabinet this week.
Busa President Sipho Pityana says “the finalisation of a least-cost IRP is the necessary first step towards the stabilisation of the energy sector.”
“The IRP has been subject to a substantive Nedlac process, and any further delay will prejudice urgent procurement and investment decisions that are necessary to ensure electricity supply security and the avoidance of further load-shedding. As the first quarter GDP results show, load-shedding significantly damages economic growth,” states Busa.
It said the gazetting of the IRP must be followed “by an immediate Ministerial Determination for the procurement of new generation capacity.”