Eskom warns SA to brace for more frequent power cuts

The country has been contending with an energy deficit since late 2005.

Eskom, the utility that generates about 95% of South Africa’s power, warned the nation to brace for more frequent power cuts as it halts the deferral of planned maintenance. The rand weakened.

“We have to unfortunately expect some increase in load-shedding,” Andre de Ruyter, who took over as Eskom’s chief executive officer at the start of this year, told reporters in Johannesburg on Friday. “We will have to give ourselves the space to fix what needs to be fixed.”

South Africa has been contending with an energy deficit since late 2005 because Eskom’s ageing plants have failed to keep pace with demand and the government stalled on giving it the go ahead to invest in new capacity.

The utility’s finances are also in dire straits – it has amassed more than R450 billion of debt and isn’t generating enough income to cover its costs, leaving it reliant on state bailouts to remain solvent. De Ruyter said the utility expects interest costs to rise as it refinances debt.

Power cuts, which reached a record 6,000 megawatts late last year, may have shaved as much as R118 billion from gross domestic product last year alone, according to the Council for Scientific and Industrial Research.

The rand extended its decline after De Ruyter’s warning about more outages, dropping as much as 0.6% to 14.852 per dollar. It was 0.5% weaker at 14.8483 at 10:42 a.m. in Johannesburg.

© 2020 Bloomberg L.P.