By Alexander Winning
JOHANNESBURG (Reuters) – 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 a.m. local time (0700 GMT) until 11 p.m. (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.
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 20 billion rand ($1.3 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 59 billion rand over the next two years, on top of 230 billion rand 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.
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