Johannesburg — WITH power utility Eskom's power stations reaching the end of their commercial life, and the planned new generating capacity expected to be built only from next year, energy analysts have warned that SA could be plunged into rolling blackouts this winter.

Last week's devastating power outages and the previous power failures in Cape Town are signs that SA faces a massive power crisis.

A US-based utility cost-management consulting firm, NUS Consulting, says projections show that this year's winter is "going to be the worst it has been ever".

"If there are any weaknesses in the system, it will show itself during this winter," says NUS Consulting's GM in SA, Stephan Dolk.

"This is because most new generation projects are only coming online from 2008 onwards -- nothing in time for this winter."

He says Eskom's spare capacity, estimated at about 8%, was not adequate to meet the country's growing demand.

A spare capacity of about 10%-15% is considered an ideal minimum level internationally. Dolk believes SA will be at a precarious 2% next year.

"If anything goes wrong -- which is why you have spare capacity -- the knock-on affect will be substantial."

But Public Enterprises Minister Alec Erwin is confident that SA "will not be plunged into darkness".

Finance Minister Trevor Manuel told news agency Bloomberg that the power outages that hit the country last week would not have a negative impact on the country's economic growth rate. He said estimates by business organisations of lost production "were overcooked".

Eskom also says it has contingency plans to counter the possibility of widespread power interruptions.

To this end, the company has budgeted R97bn to build new generating capacity in the next four years.

Short-term projects involve bringing back to service three power stations that were mothballed in the 1980s.

Two gas-fired power plants will also be launched next year.

To its credit, Eskom had foreseen the potential power shortfall about 10 years ago. It said it had projected that its peaking capacity would run out this year, followed by its base-load capacity in 2010. Peaking capacity is electricity available during hours of huge demand, either in the morning or evenings, while base load refers to the power available around the clock.

But government policy at the time prevented the parastatal from building new power stations. Government wanted to privatise Eskom and let the private sector build new generating capacity.

It was only in 2004 that government reviewed its policy and allowed Eskom to start building new generating capacity. But analysts say it was too late to avert the looming power crises.

In terms of the policy, Eskom is now responsible for generating 70% of SA's energy needs, while independent power producers will provide the rest.

"Considering the dire need for additional capacity and the 10-year lag time for bringing new generating stations into production, the question becomes not whether blackouts will occur, but when and how frequently," NUS says.

Organised business and opposition political parties have warned that prolonged power outages will have adverse consequences for the economy.

They warned that SA's cheap but erratic power supply could also thwart the country's attempts to lure foreign direct investments.

The minerals and energy department says the power failures -- caused largely by lack of investment and poor infrastructure maintenance -- cost the economy between R2,6bn and R8bn a year. The department estimates the backlog on infrastructure maintenance at R5bn.

Eskom says the cause of last week's outages was the "higher-than-expected demand for electricity" this summer.

The sweltering heat sweeping through the country has led to a steep rise in the use of air conditioners, putting pressure on the national grid.

The rise in electricity demand happened as Eskom had taken some of its power stations out of service for scheduled maintenance.

The situation was worsened by the tripping of a turbine in one of the two units at the Koeberg nuclear power station in Cape Town.

Eskom's MD of transmission, Jacob Maroga, said at the time that the company had experienced unplanned outages of 4600MW due to technical problems at the power plants.

"This is 3000MW higher than was anticipated for this period," said Maroga.

The Democratic Alliance says it has asked the National Energy Regulator of SA to investigate the cause of the recent power failures.

An earlier investigation by the energy regulator into the six major power outages in Cape Town last year found negligence, inadequate maintenance and the failure to adhere to licence conditions as the "root causes" of the rolling blackouts.

Eskom, however, denied any wrongdoing on its part.