Eskom crisis drags down South African rand as blackout continues
South Africa suffered a fifth consecutive day of electricity blackouts on Thursday, driving the rand sharply down, as cash-strapped power utility Eskom struggles with coal shortages and breakdowns at some of its plants. The state-owned firm, which supplies more than 90 per cent of the power in Africa's most industrialised economy, started cutting power from the national grid on Sunday and intensified outages on Monday after six of its generating units unexpectedly went offline.
On Wednesday, the government said Eskom was technically insolvent and needed an urgent bailout to help it manage its more than $30 billion of debt as it battles to keep its plants running. "Due to a shortage of capacity, Eskom will implement Stage 2 rotational load-shedding from 0800 (0600 GMT) today and is likely to continue until 2200," Eskom said in a statement on Thursday.
This means up to 2000 megawatts of electricity will be cut from the national power grid. On Monday the firm slashed 4,000 megawatts from the national grid, the largest cut since 2014. Locally referred to as "load-shedding", the power cuts are an emergency measure to prevent the power system from a total collapse, Eskom says.
The power crisis has spooked investors just days before a national budget, prompting a sharp slide in the rand and government bonds. The rand, which has tumbled 3 per cent in three days, weakened past 14 per U.S. dollar earlier on Thursday.
The Eskom crisis is a potential threat to the country's credit rating, which is hanging by a thread with Moody's the last of the top three agencies to rate it investment grade. President Cyril Ramaphosa is set to give further details on his plan to split Eskom into three separate units when he responds to a parliamentary debate on his state of the nation address at 1200 GMT.
(With inputs from agencies.)
- Bickering overshadows Trump's State of Union appeal for unity
- Excerpts from Trump's annual State of the Union speech
- Trump kicks off annual State of the Union address before Congress
- CORRECTED-Trump's 2020 Democratic rivals pounce to criticize State of the Union speech
- Cancer-survivor wins hearts during State of the Union address