South African Power System to Be Stretched Under Emission Rules

Eskom Holdings SOC Ltd., supplier of more than 95 percent of South Africa’s power, said the system will be stretched next year as it seeks to meet emission rules.

“We expect that the power system will be very constrained during January which would mean pressure on reserve margins,” Andrew Etzinger, a spokesman for the Johannesburg-based company, said by phone. The utility is preparing on Jan. 1 to meet new standards passed in Mpumalanga province in mid-2013, he said.

The coal-fired Kriel power plant, producing 2,000 to 3,000 megawatts, is in Mpumalanga and Etzinger said Eskom is talking to the environmental affairs department to seek an exemption.

The utility’s warning comes less than a month after Eskom declared emergency measures to avoid blackouts as the deficit between power capacity and demand shrank with planned and unplanned outages. The rand declined after the announcement.

Kriel, built in 1979, may shut units or reduce its output, should it fail to get an exemption, Etzinger said. “The plant has been operating outside of its license conditions,” he said.

A retrofit to meet the rules would cost about 7 billion rand ($674 million) and take a couple of years, he said.

The utility is spending 500 billion rand to replace aging equipment and add plants to avoid a repeat of 2008 blackouts that halted mines, including those owned by companies such as Anglo American Plc (AAL) and BHP Billiton Ltd. (BHP), for five days and paralyzed factories in the continent’s biggest economy.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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