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Viewing cable 07PRETORIA373, SOUTH AFRICA HIT BY ELECTRICITY CUTS AND FACED

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Reference ID Created Released Classification Origin
07PRETORIA373 2007-02-01 06:32 2011-08-24 01:00 UNCLASSIFIED Embassy Pretoria
VZCZCXYZ0000
RR RUEHWEB

DE RUEHSA #0373/01 0320632
ZNR UUUUU ZZH
R 010632Z FEB 07
FM AMEMBASSY PRETORIA
TO SECSTATE WASHDC 7991
UNCLAS PRETORIA 000373 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG SF
SUBJECT: SOUTH AFRICA HIT BY ELECTRICITY CUTS AND FACED 
WITH A PROLONGED PERIOD OF TIGHT ENERGY SUPPLY 
 
REF: PRETORIA 00317 
 
1. (SBU) Summary. South Africa was hit by widespread power 
outages on January 18-23 that affected many industries and 
one-fifth of all households.  Technical problems caused 
unexpected shut-downs at six conventional coal powered plants 
and at the country's sole nuclear power plant near Cape Town. 
 Claims by businesses and economists that the power cuts will 
hinder economic growth were disputed by South Africa's 
Finance Minister.  Additional generation capacity has been 
stalled since the mid-1990's, as the newly elected ANC 
government attempted and then largely abandoned the notion of 
privatizing the energy sector.  New capacity, from additional 
coal plants, will not come on line until 2010.  South 
Africans have been warned to live with a tight energy supply 
and adopt energy conservation measures until new power comes 
on-line.  End Summary. 
 
---------- 
Lights Out 
---------- 
 
2. (U) South African parastatal electricity provider Eskom 
was forced to institute mandatory rolling blackouts on 
January 18 when it unexpectedly lost 4,900 MW out of its 
36,800 MW generation capacity.  An additional 4,400 MW were 
already down due to planned maintenance.  The outages, which 
affected many industries and one-fifth of all South African 
households, ended January 23.  Technical problems caused six 
coal power plants to shut-down and another shut-down at the 
country's sole nuclear reactor at Koeberg near Cape Town. 
Note: The Koeberg plant has been the subject of intense 
scrutiny since last year when a stray bolt caused major 
damage to a generator and shut the plant down for months, 
causing major power outages in the Cape region. Department of 
Public Enterprise Minister Alec Erwin attributed that 
incident to sabotage but his allegation was never proven. 
End Note. 
 
3. (U) The blackouts caused particular problems for the 
power-hungry mining and metal industries which must 
completely shut-down and then re-start operations for each 
black-out.  After last year's power cuts, many industries, 
including most banks, installed costly back-up generators. 
South Africa's largest group of home-supply stores, Massmart, 
reported that it has experienced a ten-fold increase in 
home-generator sales since the electricity blackouts began. 
 
----------- 
Controversy 
----------- 
 
4. (SBU) The blackouts whipped up a storm of media 
controversy, with some businessmen and economists claiming 
that the power shortages would shave GDP growth by 0.2-0.3 
percent this year -- claims which Finance Minister Trevor 
Manuel dismissed as "utter garbage." Manuel said that Eskom's 
capacity constraints were not a problem and that mothballed 
coal generating plants would be brought on line 
"immediately."  The mothballed coal plants will not come 
on-line until 2008.  Meanwhile, Eskom hopes to start 
construction on a coal plant which will bring an additional 
2,250 MW on-line in late 2010.  This will be the first new 
power plant Eskom will have built in twenty years.  Eskom is 
also planning additional nuclear plants (reftel). 
 
---------------- 
Under-Investment 
---------------- 
 
5. (SBU) In the mid-1990's, the newly elected ANC government 
put a freeze on Eskom's power plant construction, expecting 
that private power generation would take up the slack.  Since 
then, numerous energy experts, including Eskom itself, 
predicted that the country was heading for a power crunch 
unless the government built new capacity.  Unfortunately, 
private sector power generation never materialized, and by 
2004, it was clear that electricity demand growth had far 
exceeded projections as a result of strong economic growth. 
That year, the SAG rescinded the freeze on Eskom expansion, 
mandating that Eskom remain in public hands and continue as 
the country's foremost energy provider.  SAG has now budgeted 
$14 billion to upgrade generation capacity by 8,000 MW over 
the next five years. 
 
-------------------------------------------- 
Future: More Black-Outs, Energy Conservation 
-------------------------------------------- 
 
6. (SBU) Eskom CEO Thulani Gcabashe warned South Africans 
last week that they will have to live with a tight energy 
supply and adopt energy conservation measures until new power 
 
comes on-line in 2010.  On January 30 Eskom released a 
statement warning that load shedding on a rotational basis 
will be instituted if additional plant shut-downs occur and 
asked consumers to switch off non-essential equipment such as 
air conditioners, geysers (hot water heaters) and swimming 
pool pumps.  Demand for electricity will peak in the coming 
Southern Hemisphere winter months of June, July and August. 
 
------- 
Comment 
------- 
 
7. (SBU) CEO Gcabashe's warning is significant because it 
marks the first time Eskom has admitted it may not be able to 
meet energy demand in the coming years.  During last year's 
power outage, Eskom reassured the public that the electricity 
cuts were a one-time event.  Eskom's acceptance of reality 
establishes a breach between Eskom and Finance Minister 
Manuel's dismissal of the problem.  The question is now how 
long it will take Manuel to accept publicly the same reality. 
BOST