UPDATE: S.Africa's power grid under strain, diesel a concern - CNBC Africa

UPDATE: S.Africa's power grid under strain, diesel a concern

Southern Africa

by Reuters 0

South Africa's power grid under significant pressure as more businesses resume operations. PHOTOS: Eskom

The increased pressure is expected as more businesses reopen after the holiday season, a spokesman for state power utility Eskom said on Wednesday.

(READ MORES.Africa’s Eskom to implement rolling black-outs)

Andrew Etzinger told Reuters on Wednesday that reserve margins at the moment were "virtually zero" and the likelihood of power cuts on Wednesday was 60-70 percent after two generators tripped in the morning.

Eskom is scrambling to keep the lights on in Africa's most advanced economy as power demand threatens to outstrip capacity, raising the prospect of rolling blackouts.

Power shortages are a major constraint to already sluggish economic growth and are seen as a deterrent to foreign investment. South Africa last year suffered its worst power outages since 2008 due to creaking infrastructure, power plant failures and emergency maintenance.

Etzinger said if the cash-strapped utility were unable to purchase diesel supplies for its gas-fired power stations, Eskom would lose 5 percent of its capacity and blackouts would then occur on an almost "daily basis" until the end of March.

He stressed that was a "worst-case scenario" and said the government was working with the state-run company to find funding solutions.

Even with a 20 billion rand ($1.7 billion) cash injection from the government and permission to raise electricity tariffs, Eskom has said it needs more funds to ensure liquidity.

Etzinger said the sliding price of oil, which fell below $50 a barrel on Wednesday for the first time since early 2009, was a relief to the utility and would help in its quest for diesel.

But even with an adequate supply of diesel, rolling blackouts from now to the end of the southern hemisphere summer in April remained likely, he said.

"It's unlikely that we will come to the end of summer without some form of load shedding," he said, using the local term for power cuts.

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Eskom does much of its maintenance in the summer so it has better reserves during winter when demand for power peaks.

Controlled power cuts are used to prevent a total collapse of the grid and Eskom regularly appeals to South Africans through television campaigns and social media to reduce electricity use.

Etzinger said it would take at least two weeks for the grid to be restored after a collapse, a scenario that would bring the country to a standstill and cause untold damage to the economy.

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