Eskom Electricity Strike to Damage Economy, Soccer World Cup, CEO Says
Eskom Holdings Ltd., South Africa’s state-run power utility, said the threat of a labor strike next week may undermine the soccer World Cup and economic growth.
“We can’t afford” union demands, Chief Executive Officer Brian Dames said in Johannesburg today. “A strike will have a national impact, damage the economy and affect the World Cup.”
Eskom’s offer of an 8.5 percent pay increase and 1,000 rand ($130) housing allowance was rejected by the National Union of Mineworkers and the National Union of Metalworkers. The unions are demanding a 9 percent increase and 2,500 rand allowance. The NUM, representing 16,000 of Eskom’s 37,000 workers, said it will strike, while the Solidarity union is seeking more talks.
The company won’t be able to secure supply if all three unions strike “for more than a few days,” Dames said.
South Africa, the continent’s biggest economy and the first nation in the region to host the World Cup, is carrying out a 460 billion rand expansion project that seeks to avoid a repeat of power cuts in 2008 that closed mines and smelters for days.
“We may face the same impact on the economy that we have seen when we previously couldn’t supply,” said Steve Lennon, Eskom’s managing director of corporate services.
South Africa’s electricity regulator agreed to allow Eskom to raise tariffs in South Africa by 25 percent this year and 26 percent in each of the following two years, less than the annual 35 percent increase that the company had requested.
Eskom doesn’t plan to ask the regulator for an adjustment of the tariffs to meet union pay demands, Dames said.
To contact the reporters on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net
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