Economics
South Africa Blackouts Ended by Economic Slowdown, Not Eskom
- State-owned utility Eskom's power sales lowest since 2006
- Commodities rout could restrain demand for electricity
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After power cuts that crippled economic growth, South Africa has kept the lights on for more than six months and outages may not return in the next few years. The improved outlook is less about what the state power utility is doing and more to do with an economic slowdown.
A rout in metals prices has hurt mining and lower global demand has curbed manufacturing, which together make up 20 percent of the gross domestic product of Africa’s most-industrialized country. While less demand keeps supply consistent, it exacerbates the financial issues faced by Eskom Holdings SOC Ltd. The utility’s borrowing costs have increased and the government has buoyed the company with cash injections.