Eskom: Blackouts on the cards

Johannesburg - South Africa will have a power surplus during this year's soccer World Cup but supply will be "extremely tight" from 2013 to 2014 and the country will have to save energy to avoid blackouts, utility Eskom said.

Brian Dames, the chief officer for generation business at state-owned Eskom told a parliamentary committee on Tuesday that electricity supply would be under pressure in the years after the tournament, SAPA news agency reported.

"The power supply is going to be extremely tight from 2013 and 2014 until we have baseload power stations coming in," he said. "It is very important that as a country we work together to prevent any type of power interruptions."

Dames said power saving was crucial to avoid any enforced power cuts in the future, similar to power blackouts that brought the vital mining industry in Africa's biggest economy to a standstill for days in early 2008.

The utility, which provides 95 percent of the country's power, has suffered from a lack of investment in new capacity and ageing power stations as demand soared.

"We will work hard to do what we have to do and you have our commitment in that regard," Dames said.

"We must understand as South Africans that we are not using electricity that efficiently and as a country we have to focus on how we can reduce our energy usage," he said.

Dames said Eskom was "playing catch up" on its infrastructure and would be constrained financially after the country's power regulator rejected its application for a 35% tariff hike in each of the next three years.

The regulator granted Eskom a nominal 24.8% electricity price increase this year, and increases of 25.8% and 25.9% for the following two financial years.

Cash-strapped Eskom wanted to raise electricity prices by 35% a year for three years, to help it raise R461bn to build more plants and avoid the blackouts that crippled the vital mining industry in 2008.

South Africa's electricity is among the cheapest in the world, partly due to a government policy of underpricing power to attract industry in the country.

Dames said South Africa would not be able to take advantage of any economic upturn if the power supply was not adequate.

"We are now playing catch up. We have indicated that we would have a shortfall in our funding. We would have to critically review our expansion programme which is required to meet the country's needs," he said.

"If we do not invest in infrastructure, when the economic upturn is there, we will not be able to take part in that."

- Reuters