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Eskom Lifts Power Emergency After Blackouts Shut Shops

March 7 (Bloomberg) -- Eskom Holdings SOC Ltd. lifted its power emergency in South Africa after the first rolling blackouts in six years shut shops and factories and delayed flights in the continent’s biggest economy.

Power was restored to all areas at 10 p.m. local time yesterday, the Johannesburg-based state-owned utility said in a statement on Facebook. Scheduled electricity cuts, known locally as load-shedding, may still occur if the need arises, it said.

Eskom, which produces 95 percent of the nation’s electricity, declared an emergency yesterday after heavy rains disrupted its coal supply used to generate more than 80 percent of power. The blackouts shut most shops and restaurants at the Victoria & Alfred Waterfront in Cape Town, South Africa’s most-visited tourist attraction, including those owned by Exclusive Books Group Ltd. and Mugg & Bean. Johannesburg’s main international airport was forced to use backup generators, disrupting flights.

“If we are looking at power constraints of about a day or two, then our losses would be in the lower billions, but if you’relooking at power constraints of a week or more, it’s going to escalate very fast,” Neren Rau, chief executive officer of the Johannesburg-based South African Chamber of Commerce & Industry, said in a phone interview.

‘Very Disruptive’

As part of yesterday’s blackout schedule, as many as 4,000 megawatts of the nation’s installed capacity of 42,500 megawatts was cut. A megawatt is enough capacity to power about 200 middle-income South African home during peak times, Andrew Etzinger, the utility’s spokesman, told reporters in Johannesburg today.

“The bottom line in all of this is that we have a vulnerable system and any shock to it can precipitate an emergency,” Chairman Zola Tsotsi said at the same briefing. “Even when the new capacity comes online, it will take some time to have a level of reliability that we feel will give us the comfort that the system is absolutely intact.”

Eskom is spending 500 billion rand ($47 billion) through 2017 adding almost 11,000 megawatts of capacity to the national grid and servicing its aging fleet of plants. The first unit of the 4,764-megawatt Medupi coal-fired facility will deliver power from the first of six units in the second half of this year.

‘Not Enough’

“Even the new Medupi units would not have been enough to have avoided the current load-shedding yesterday given the size of the gap,” Tsotsi said.

Consol Ltd., a glass manufacturer that’s Africa’s biggest and is owned by Brait SE, halted production at one of its plants in Nigel, east of Johannesburg, for four hours yesterday because of the blackout, CEO Mike Arnold said in a phone interview.

“It’s very disruptive, if you are down for four hours, you are effectively out for at least eight,” he said.

Eskom declares power emergencies only after consulting with the nation’s energy regulator, and rolling blackouts end once the alert is lifted, CEO Brian Dames said.

“We need to apologize to all South Africans for the inconvenience caused by what has happened,” Dames said. “It was certainly a painful decision. We’re well aware of the impact thereof on people’s lives, on the economy.” The company has to protect the system “ from a total blackout, a situation we want to avoid at all costs,” he said.

The rand fell 1.2 percent to 10.7291 against the dollar at 4:55 p.m. in Johannesburg, extending its decline this year to 2.2 percent.

The direct effect of the power cuts in South Africa, which is the world’s biggest platinum producer, are outweighed by indirect costs, Mike Schussler, an economist at Economists.co.za. said by phone from Johannesburg.

“The indirect effect is the bigger damage -- we have been losing out on investment in new smelters and refineries and deep-pit mines in the last decade because we do not have the power,” he said.

To contact the reporters on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net; Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Ana Monteiro, John Viljoen

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