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South Africa’s Eskom Ends Power Emergency

Feb. 21 (Bloomberg) -- Eskom Holdings SOC Ltd., the utility that supplies 95 percent of South Africa’s electricity, ended emergency measures to cut power consumption after some of its generating capacity came back online after maintenance.

An appeal for industrial users to reduce demand by at least 10 percent was due to end at 9 p.m. local time yesterday, Eskom said in a statement. The state-owned utility made the request earlier the same day under the so-called declaration of emergency protocol after four generating units went down for maintenance and power imports dropped.

“It is important that all electricity consumers contribute to savings by reducing their consumption as we remain on high alert until early next week,” Eskom said.

The utility is spending 500 billion rand ($45 billion) to replace aging equipment and add plants to avoid a repeat of the blackouts that affected homes, mines and factories for five days in 2008. Eskom, which produces about 85 percent of its electricity from coal, last declared a power emergency in November, when supplies remained tight for about 10 days.

The company said yesterday that the efforts of industrial, commercial and residential customers contributed about 1,000 megawatts of savings.

South Africa is the world’s biggest producer of platinum, used in catalytic converters to reduce harmful vehicle emissions, and the sixth-largest miner of gold.

Cahora Bassa

The local units of ArcelorMittal, BHP Billiton Ltd. and Glencore Xstrata Plc are among the 32 companies that are members of the country’s Energy Intensive Users Group that can be called on to reduce usage when Eskom’s reserves are running low. Shaun Nel, a director at the group, said Eskom asked large customers to “voluntarily cut” usage by as much as 30 percent.

Eskom’s capacity on power lines from the Cahora Bassa hydropower plant in neighboring Mozambique was reduced, Nel said. The facility supplies 1,300 megawatts of the utility’s capacity.

Eskom said it had asked local municipalities to switch off residents’ hot-water heaters to help reduce consumption. Some local authorities routinely switch off water-heating systems, known in South Africa as geysers, to save power.

About 23 percent of Eskom’s 42,500 megawatts of installed generating capacity has been out of service this year, according to Bloomberg calculations made using the utility’s data. Capacity exceeded supply by an average of 7.5 percent in the period, half the 15 percent buffer that the company targets.

The yield on Eskom’s $1 billion of bonds due in August 2023 was little changed at 6.43 percent by 8:56 a.m. in Johannesburg.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

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

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