S.Africa's Mbeki vows quick end to power crisis

CAPE TOWN (Reuters) - South African President Thabo Mbeki pledged on Friday quickly to overcome a power crisis that has damaged Africa's biggest economy and raised questions over whether it can host the 2010 soccer World Cup.

In an annual state of the nation speech to parliament, Mbeki vowed to maintain investor-friendly policies and tried to calm fears raised by rolling blackouts that threaten his legacy as the steward of an unprecedented economic boom.

Gold and platinum mines were forced to shut for five days last month, provoking investor concern that South Africa was entering a period of instability after nearly a decade of growth. Gold and platinum prices hit record highs and the rand currency fell sharply.

There have been repeated calls from the media and opposition for Mbeki to fire key ministers accused of ignoring repeated warnings of inadequate power capacity.

"We face an emergency, but we can overcome the problems in a relatively short period," Mbeki told parliament in Cape Town.

The 65-year-old leader also tried to reassure investors worried that growing leftwing influence would push his government into abandoning centrist policies.

Mbeki lost the leadership of the ruling African National Congress last year to Jacob Zuma, who has the strong backing of the powerful Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP).

Both COSATU and the SACP are in a formal alliance with Mbeki's ANC-led government.

The festive tone that once marked his state-of-the-nation speeches was absent on Friday and his tone was subdued, echoing the mood of many South Africans and reflecting his ANC defeat.

"We will continue to maintain a fiscal posture that supports continued economic growth and development and reducing our external vulnerability," Mbeki said as Zuma looked on.

ZUMA INFLUENCE

The possibility that Mbeki could become a lame duck as Zuma supporters try to influence the government ahead of elections in 2009 threatens turbulence not seen since the apartheid era.

Mbeki promised to continue the battle against poverty, crime and unemployment and expressed confidence the nation would host the World Cup.

The electricity problems have added to worries that South Africa's infrastructure is not up to hosting the competition. The international soccer body FIFA has played down suggestions it might strip South Africa of the event.

"I have absolutely no doubt that we will honor our undertaking ... to create all the necessary conditions for the holding of the best ever ... soccer World Cup tournament," Mbeki said.

Zuma struck a conciliatory tone.

"I think the speech was generally very good," he said. "I think there is adequate energy and commitment from the ANC, from government generally. There is no doubt about that. What the president put across here is what we are all supporting."

Nicholas Kennedy of market analysis firm 4castweb was not impressed by the speech.

"Those hoping for concrete details on how the government will tackle the electricity crisis are likely to have been a little disappointed ... " he said.

Mbeki also said his government had budgeted 2.3 billion rand ($296 million) for industrial projects and planned five billion rand in tax incentives over three years to support the industrial program.

DEMAND FOR EARLY ELECTIONS

The main opposition party said Mbeki had failed to "confront the realities facing (the) country head-on" and called for early elections.

"The Democratic Alliance will next week table a motion in Parliament to dissolve the National Assembly in order for a fresh election to be held," party leader Helen Zille said in her weekly letter posted on the party's website.

"We believe that the people of South Africa should decide on which party, not just which faction of the ruling party, they want to lead them out of the crises we face," she said.

The DA has 47 members in the 400-seat parliament and would need other small parties' support to get the two-thirds it needs to pass the motion.

(Additional reporting by Wendell Roelf and Phumza Macanda)

(Editing by Tim Pearce)