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eh UPDATE 4-S.Africa's Eskom imposes first blackouts in six years

Source: Reuters - Thu, 6 Mar 2014 20:47 GMT
Author: Reuters
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* First rolling blackouts in six years

* Third power emergency in two weeks

* Eskom says heavy rains soaked coal stocks

* "High probability" of rolling blackouts on Friday

By Olivia Kumwenda-Mtambo and Ed Stoddard

JOHANNESBURG, March 6 (Reuters) - South African state utility Eskom imposed rolling blackouts for the first time in six years on Thursday, forcing rail networks and banks to switch to emergency generators after torrential rain soaked power station coal stockpiles.

Eskom lifted the blackouts at around 2000 GMT as demand from businesses and households eased. However the utility earlier said the overall status of the grid in Africa's biggest economy remains serious and there was a "high probability" of more outages on Friday.

The rolling power outages, called "load shedding" locally, caused misery for millions during an electricity crunch in 2008 that cost billions of dollars in lost output and caused social unease in a country blighted by violent crime.

The latest power crisis comes at a bad time for President Jacob Zuma and the ruling African National Congress (ANC), with general elections in two months.

However, unlike in 2008, the rand took the outages in its stride, firming to 10.5885 against the dollar, its strongest since early January, while the Johannesburg stock market hit record highs.

Analysts estimate the direct economic impact of occasional outages to be minimal, although they might crimp longer-term investment by reminding businesses of the risks to the power supply.

"The problem is fundamentally due to the lack of investment in system capacity and the previous mismanagement of Eskom," said Nomura analyst Peter Attard Montalto. "Although the management situation has changed radically since 2008, there is little it can do."

Eskom has been scrambling to build new power stations to ease its razor-thin supply margins, but has been beset by delays at its massive 4,800 MW Medupi plant, which is expected to bring its first units online in the second half of this year.

As a result, Eskom had to reduce its nationwide power demand by 4,000 MW, or around 10 percent of the grid's capacity, in order to prevent a system collapse.

Households were told to turn off all appliances, while major industrial clients such as mines and smelters were asked to cut their usage by 10 percent. Eskom's single biggest customer is the mining giant BHP Billiton.

POWERLESS

Unlike in previous "power emergencies" declared in the last two weeks, Eskom was forced to impose blackouts on urban areas.

Generators roared into life in Johannesburg's Sandton financial district, and the high-speed Gautrain rail link between Johannesburg and Pretoria switched to emergency power, the operator said, adding that services were unaffected.

Executives from Exxaro, South Africa's second-largest coal producer, were giving a results presentation to investors in a building that also had to switch to a back-up generator.

Many small businesses did not have that luxury.

"We don't have power. Our computers are not working. At the moment we are not productive. We are just sitting," said Nelani Mashava, a tour consultant at a Johannesburg travel agency.

"The office is totally dark," she added. "We just have light from the windows."

Eskom said the grid had come under intense strain because of torrential rain in the eastern province of Mpumalanga, which had drenched coal supplies sitting outside power stations. Most of the utility's power stations are coal-fired.

The South African weather service forecast thunderstorms over the area until at least the middle of next week.

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