Eskom Blames New-Plant Faults as South Africa Blackouts Continue

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The Kusile coal-fired power station in Mpumalanga, South Africa.
Photographer: Waldo Swiegers/Bloomberg

South Africa’s struggling power utility started a third day of power outages, blaming issues including failures at two huge new power stations that are also the main source of the company’s massive debt.

Eskom Holdings SOC Ltd. on Tuesday implemented rotational power cuts of 3,000 megawatts. The utility Monday resorted to the most intense cuts in four years after seven generating units tripped within a period of five hours. The blackouts come less than a week after President Cyril Ramaphosa announced a plan aimed at turning the business around.

The utility’s board held an emergency meeting with Public Enterprises Minister Pravin Gordhan, Eskom said in a statement.

“The Medupi and Kusile power stations -- the core of the new build program -- are continuing to show a lack of reliability to contribute meaningfully to Eskom’s generating capacity, which is a serious concern,” it said.

Read: Eskom’s Financial Woes Deepen as New Plant Repair Bill Mounts

Medupi and Kusile are already years behind schedule and expected to cost more than 292 billion rand ($22 billion), roughly double initial estimates. That has contributed to the majority of its 419 billion rand of debt.

Two of the generating units that failed on Monday were at Medupi, the Johannesburg-based Business Day newspaper reported, without saying where it got the information. Gordhan said in December that South Africa plans to take action over “sub-standard” work by contractors at the two power stations, including Hitachi Power Africa Ltd., that were contributing to scheduled blackouts.

Eskom’s board has “resolved to institute an urgent review to establish when, realistically, these projects will be completed, the extent of design- and other operational faults, what steps can be implemented to minimize the ever-escalating costs and what can be done to increase output.”

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Eskom Chief Executive Officer Phakamani Hadebe in November said defects at the new plants would cost 1.5 billion rand. The utility increased that amount to 2 billion a couple months later in a response to questions.

South Africa’s latest power cuts are taking a toll on the economy. The rand weakened on Monday following comments by ratings company Moody’s Investors Service that the plan to split Eskom into generation, distribution and transmission, announced by Ramaphosa, doesn’t properly address the debt issue.