Power Cuts May Threaten S.African Rebound

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Aug. 24 (Bloomberg) -- South Africa’s economic recovery is under threat because its national power utility is unable to raise funds to build power plants needed to keep the world’s biggest precious metal mines running.

State-owned Eskom Holdings Ltd. may on Aug. 27 give details at its annual results on progress in sourcing funds for a five- year, 385 billion-rand ($50 billion) expansion. Eskom already delayed several projects because of funding difficulties.

Underinvestment led to the near collapse of the country’s power system in January last year, closing most mines and metal smelters for five days. That followed months of intermittent power cuts in the biggest cities, as well as power rationing for Eskom’s biggest customers, putting a brake on industrial output.

“Any delay or rescheduling of Eskom’s capital expenditure is ill-conceived,” Iraj Abedian, chief executive officer of Johannesburg’s Pan-African Capital Holdings Ltd., which offers economic research and investment banking advice, said in an interview. “Eskom should be learning from its past mistakes and not procrastinate. We paid the price for it.”

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