South Africa Must Cut Power Use By 15 Percent: Minister

South Africa must cut power consumption by 10 percent to 15 percent to avoid a repeat of rolling blackouts that crippled the mining industry in 2008, Energy Minister Dipuo Peters said.

South Africans are starting to realize that we need to use energy efficiently,” Peters said in an interview in Durban yesterday. State-owned utility Eskom Holdings SOC Ltd. may be able to avoid blackouts with reduced consumption, she said.

Eskom, which supplies about 95 percent of the nation’s power, is straining to meet demand from a growing economy as consumption is set to swell when the Southern Hemisphere winter drives demand for heat. Repairs at the Koeberg nuclear power plant near Cape Town are crimping supply, while imports are cut because of flooding in Mozambique.

Eskom estimated surplus capacity was 1.5 percent over peak demand for March 18. That’s as thin as the margin was when power cuts struck five years ago, pushing gold and platinum prices to records as Anglo (AAL) American Plc, Impala Platinum Holdings Ltd. (IMP) and Harmony Gold Mining Co. (HAR) halted operations in South Africa.

A repeat of the January 2008 blackouts that halted Anglo’s mines for five days and paralyzed factories would imperil South Africa’s 2013 growth forecast of 2.7 percent, Peters said.

The nation is trying to expand available power after a decade in which surging demand outstripped added supply. Total electricity consumption increased 20 percent from 2000 to 2010, while generation capacity grew by 7 percent, according to the U.S. Energy Information Administration.

Contractor Penalties

Eskom, based in Johannesburg, has established an initiative to encourage South Africa’s 49 million citizens to cut power consumption by 10 percent. The company is also building a 4,800 megawatt coal-fired power plant, known as Medupi.

Peters said she supports penalties for Eskom contractors who failed to deliver on time, delaying Medupi’s completion.

“Eskom has the right to take the most appropriate arrangement,” Peters said. “If you don’t deliver there must be penalties. I would support that.”

Alstom SA (ALO), Europe’s second-biggest power-equipment maker, on March 18 said it had asked for more time to complete work on the project, adding to concerns that Medupi’s first unit won’t start by year-end.

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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