South Africa’s Electricity Minister Warns of Worsening Energy Crisis Amid Record Outages

South Africa's Electricity Minister Warns of Worsening Energy Crisis Amid Record Outages

South Africa’s newly appointed electricity minister, Kgosientsho Ramokgopa, has issued a stark warning that the country’s record electricity outages could potentially worsen, as demand is expected to rise in the coming winter months. He also stated that the state power utility’s performance targets must be carefully reviewed to ascertain their appropriateness.

  1. South Africa’s newly appointed electricity minister, Kgosientsho Ramokgopa, warns that the country’s record electricity outages may worsen as demand increases during the winter months, highlighting the need to review the state power utility’s performance targets.
  2. President Cyril Ramaphosa has tasked Ramokgopa with reducing outages, improving Eskom’s plant performance, and accelerating the procurement of additional generation capacity in order to address the energy crisis.
  3. Various solutions are being considered to tackle the crisis, including hiring international consultants to assess Eskom’s coal plants, potentially granting concessions to private investors to operate power plants, and exploring measures to reduce energy demand, such as remotely switching off household water heaters.

In an interview at Bloomberg’s Johannesburg office on Friday, Ramokgopa emphasized the importance of setting explicit targets that must be met in order to instill confidence in businesses, markets, and households that the ongoing energy crisis is being effectively addressed. “All indications are that it is going to be difficult,” he said, referring to the likelihood of a further deterioration in the dire energy situation.

As Africa’s most-industrialized nation, South Africa has experienced daily rolling blackouts this year, due to the state-owned power company Eskom Holdings SOC Ltd.’s inability to meet the nation’s electricity demands with its aging plants. Eskom currently supplies approximately 90% of South Africa’s electricity. In response to this crisis, President Cyril Ramaphosa appointed Ramokgopa as electricity minister earlier this month, a new position within the presidency, and tasked him with reducing outages, enhancing Eskom’s plant performance, and expediting the procurement of additional generation capacity.

“I see myself as a portfolio manager addressing the multiplicity of programs” aimed at improving power supply, Ramokgopa said, adding that no previous minister had undertaken such a task.

Over the next four weeks, Ramokgopa plans to visit power stations and consult with business representatives to gauge firsthand how much unused generation capacity can be connected to the grid and how rapidly this can be achieved. Following this assessment, he intends to release a comprehensive plan outlining the amount of additional power to be incorporated into the grid and the corresponding timescale.

Eskom’s performance has deteriorated so severely that less than half of its capacity has been consistently available. Mpho Makwana, the utility’s chairman, recently praised the staff after six of its plants achieved an energy availability factor of 70% for the first time since May. However, Ramokgopa expressed concern that such gains might be short-lived, saying, “The problem with that is just today we could be told the same ones are now down to 40%.”

The central bank estimates that the ongoing outages, which began in 2008, will reduce economic growth by 2 percentage points this year. Furthermore, the blackouts have negatively impacted support for the governing African National Congress, with opinion polls suggesting the party could lose its parliamentary majority in next year’s elections.

In an effort to address the crisis, South Africa’s National Treasury has enlisted a consortium of international consultants to evaluate Eskom’s fleet of 14 coal plants and determine which can be restored to meet original equipment-manufacturer standards. To access 254 billion rand ($13.8 billion) of government debt relief over the next three years, the utility must implement the group’s recommendations.

According to Ramokgopa, “all options are on the table,” including potentially granting concessions to private investors to operate power plants if deemed feasible. He cited the privately owned Kelvin power station, which claims to have an 80% energy availability factor, although this figure remains unconfirmed.

Ramokgopa also stressed the need to explore measures to reduce energy demand, such as utilizing technology to remotely switch off household water heaters, which could potentially free up as much as 4,000 megawatts of capacity.

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