JOHANNESBURG (Reuters) – South Africa’s government on Friday asked industry for the cheapest and quickest options to ease a power crunch, as cabinet held an emergency meeting to try and resolve a crisis threatening growth in Africa’s most industrialised economy.
South African President Cyril Ramaphosa speaks during a news conference after a meeting with his Nigerian counterpart Muhammadu Buhari, in Pretoria, South Africa, October 3, 2019. REUTERS/Siphiwe Sibeko
President Cyril Ramaphosa called the meeting after struggling state utility Eskom implemented the most extensive power cuts in more than a decade earlier this week, disrupting supply to businesses and households.
Eskom, which cut power for a ninth straight day on Friday, is choking under a massive 450 billion rand ($30.6 billion) debt burden and struggles to meet demand because its creaking coal-fired power stations haven’t been maintained properly.
It says the country desperately needs an additional 5,000 megawatts (MW) of generating capacity.
The energy ministry published a document on Friday requesting information from the power industry on options for between 2,000 MW and 3,000 MW of new capacity at least cost.
Firms are to reply by the end of January and present options that could be connected to the grid within three to six months or six to 12 months, if they are selected in a procurement process, the document showed.
For a factbox on potential power generation options:
Ramaphosa had said on Wednesday that Energy Minister Gwede Mantashe and Public Enterprises Minister Pravin Gordhan would present proposals on solving the crisis to the cabinet meeting, after the outages forced some miners to temporarily cut output early this week.
The power crisis is one of the biggest challenges for the former trade union leader turned millionaire businessman who has promised to fix ailing state firms and reverse years of mismanagement and stagnation.
But he has found it hard to overhaul Eskom and lift the country’s growth rate due to entrenched opposition to his reforms. Another struggling state firm, South African Airways, entered a form of bankruptcy protection last week.
Some of the proposals being considered by cabinet on Friday include fast-tracking applications of businesses seeking to generate their own electricity, bringing in temporary generators and connecting renewable energy projects to the grid sooner than initially planned.
Private firms have been clamouring for years for the government to ease regulations to allow them to generate more of their own electricity.
Roger Baxter, chief executive of industry group the Minerals Council, told Reuters that miners could bring online between 500 MW and 1,500 MW of their own generating capacity over the next few years, if regulations were eased.
“All our eggs are in one basket with Eskom, which is not delivering. Government and business need to work together to solve this problem,” Baxter said.
Eskom, which cut 2,000 MW of power from the national grid on Friday morning but later scaled it back to 1,000 MW, wants a larger safety margin to do more maintenance on its plants.
As of Friday morning, Eskom had almost 12,000 MW of unplanned breakdowns, versus its nominal capacity of around 44,000 MW.
Power cuts are expected to ease from the middle of next week, as many local businesses shut down before the Christmas and New Year public holidays.
($1 = 14.7075 rand)
Additional reporting by Nqobile Dludla, Mfuneko Toyana and Joe Bavier; Editing by Tim Cocks and Emelia Sithole-Matarise