Brace Yourselves: South Africa’s Electricity Crisis May Worsen, Warns New Minister
South Africa’s recently appointed electricity minister, Kgosientsho Ramokgopa, has issued a stark warning about the country’s escalating power crisis. With electricity outages already at a record high, the situation could deteriorate even further as winter approaches and demand rises. In an interview at Bloomberg’s Johannesburg office, Ramokgopa emphasized the need for clear performance targets to reassure businesses, markets, and households that the crisis is being addressed.
Eskom’s Struggles and a New Ministerial Role
South Africa, Africa’s most industrialized nation, has experienced daily rolling blackouts this year due to the state-owned power company, Eskom Holdings SOC Ltd., being unable to meet the demand from its aging power plants. Eskom is responsible for supplying about 90% of the country’s electricity.
In response to the crisis, President Cyril Ramaphosa appointed Ramokgopa as electricity minister, a new position in the presidency. Ramokgopa’s role is to reduce outages, improve Eskom’s plant performance, and expedite the procurement of additional generation capacity. He sees himself as a “portfolio manager” who will address the various programs aimed at improving the power supply situation.
A Comprehensive Plan in the Works
Over the next four weeks, Ramokgopa plans to visit power stations and meet with business representatives to assess the unutilized generation capacity that can be connected to the grid and the timeframe for doing so. Following this assessment, he will release a detailed plan outlining the additional power to be brought online and the associated timeline.
Eskom’s performance has significantly declined, with less than half of its capacity regularly available. On Thursday, Eskom’s chairman, Mpho Makwana, praised the utility’s staff after six of its plants reached a 70% energy availability factor for the first time since May. However, Ramokgopa pointed out that the same plants could drop to a 40% availability factor, illustrating the severity of the crisis.
Economic Impact and Future Solutions
The central bank estimates that the ongoing outages, which began in 2008, will reduce economic growth by 2 percentage points this year. The blackouts have also affected the popularity of the ruling African National Congress, with opinion polls suggesting the party could lose its parliamentary majority in next year’s elections.
South Africa’s National Treasury has enlisted a group of international consultants to review Eskom’s 14 coal plants and determine which ones can be restored to original equipment manufacturers’ standards. To access R254 billion of government debt relief over the next three years, Eskom must implement the consultants’ recommendations.
Ramokgopa revealed that “all options are on the table” in terms of finding solutions, including offering concessions to private investors to operate power plants if feasible. Additionally, he suggested exploring ways to reduce energy demand, such as remotely switching off water heaters in households, which could potentially free up to 4,000 megawatts of capacity.