12 February 2019

South Africa: Blackouts Cripple South Africa Again As Eskom Stumbles

analysis

South Africa grappled with traffic gridlock and shuttered businesses after the struggling state power utility cut supply for a third day to prevent a total collapse of the grid.

The return to blackouts compounds worries about Eskom Holdings SOC Ltd.'s precarious position and the threat it poses to the economy. It's also an embarrassment for the ruling African National Congress just three months ahead of national elections. The rand tumbled Monday and government bond yields surged after Eskom suddenly announced sharply widened cuts.

The crisis places President Cyril Ramaphosa, a former labor leader who took power in February last year, in a quandary. He'll stand no chance of meeting a pledge to revive the flagging economy unless he fixes Eskom, and his hopes of a decisive win in the May 8 vote will be seriously undermined.

"It's time to treat it like a wartime emergency," said Iraj Abedian, the head of Pan-African Investments and Research Services, who has advised the government on economic policy.

The utility, which blamed poor maintenance for blackouts late last year, said it's increasingly concerned about ongoing problems at two new coal-fired power stations. The huge Medupi and Kusile plants -- already over-budget and years delayed...

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