July 17 (Bloomberg) -- Eskom Holdings Ltd., South Africa's state-run power utility, estimates the country may face a shortage of 100 million metric tons of coal by 2017 if the government doesn't intervene to secure supplies for local use.

``The low growth in South Africa's coal production is of very great concern and poses a serious supply risk to Eskom and South Africa,'' the Johannesburg-based company said today in its annual report. Lower quality coal, previously only used by Eskom, is becoming attractive to importers, particularly in India, it added.

With Eskom generating about 87 percent of its power from coal, the government may restrict exports to ease a national power shortage, the Department of Minerals and Energy said May 19. While the country is the biggest supplier of coal to European power plants, and there is growing demand from India, there should be enough of the fuel for both Eskom and exporters, analysts say.

``By 2015, we should have enough coal supply for the local market and enough for the export market,'' Xavier Prevost, an analyst at Wood Mackenzie in Johannesburg, said by phone. Even without government intervention, South Africa has 2.1 billion tons of coal reserves that should become available in the next 5 to 10 years, he added.

Eskom burnt 125.3 million metric tons of coal last year, compared with 119.1 million tons in 2007. The utility currently has 23.8 days of coal stocks at its power plants, exceeding its 20-day target.

Whether coal reserves should ``be in private hands or should we have certain reserves tagged for Eskom,'' is a ``strategic decision'' yet to be made, Jacob Maroga, chief executive officer of the utility, told reporters in Johannesburg yesterday.

The rate of increased coal use ``must be matched with a corresponding rate of investment in mines,'' Maroga said. Eskom currently doesn't own coal mines.

To contact the reporters on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net Ron Derby in Johannesburg at rderby1@bloomberg.net

Last Updated: July 17, 2008 08:42 EDT