South Africa faces more power cuts, increasing the risk of Ramaphosa's reform

JOHANNESBURG (Reuters) – South Africa is facing new power cuts, power provider Eskom said on Monday that was trying to prevent the collapse of its power grid. , thus putting to the test the reforms of President Cyril Ramaphosa.

South African President Cyril Ramaphosa arrives ahead of the G20 Leaders Summit in Buenos Aires, Argentina on November 29, 2018. REUTERS / Martin Acosta

Eskom put in place Monday a fifth day of controlled power cut, putting more pressure on an economy already plunged into recession just months before national elections.

"The whole week could be seriously embarrassed if we are not able to replenish diesel and water supplies and reduce unplanned downtime," said Eskom spokesman Khulu Phasiwe.

Eskom, which faces a severe financial crisis, coal shortages and power plant outages, announced Monday that it was cutting up to 2,000 megawatts of its power grid.

The electricity company, which last week called for a bailout or debt relief, began Thursday controlled cuts, called "load shedding", as demand for electricity has exceeded the available capacity.

"Eskom teams are working hard to save the situation, but the process is going to be long, long and expensive," said Phasiwe.

Ramaphosa has made Eskom 's reform a priority, but his plan to attract investors likely to contribute to the growth of the economy before the elections next May, has been hampered by budget constraints. nL8N1X61GL]

"Eskom as an institution and its ability to provide a stable power supply is the biggest risk to the investment motivation of @ CyrilRamaphosa and South Africa's tax authorities," Twitter analyst Isaah Mhlanga, an economist with chef at Alexander Forbes Investments.

Jeff Schultz, senior economist at BNP Paribas South Africa, said that prolonged power outages would likely hurt economic growth in the first quarter of 2019, although a slowdown in manufacturing during the Christmas period will buy Eskom at some point.

"But in mid-January, if we still face load shedding, it's a much more pressing problem for the economy," Schultz said.

South Africa entered recession in the second quarter for the first time since 2009. Third quarter gross domestic product figures are expected on Tuesday, analysts polled by Reuters forecast GDP growth of 1.6% on a quarter.

($ 1 = 13.6396 rand)

Edited by James Macharia and Alexander Smith

Our standards:The principles of Thomson Reuters Trust.