UPDATE 4-S.Africa power crisis threatens growth-govt

(Adds Maroga comments, details, background)

By Paul Simao

JOHANNESBURG, June 9 (Reuters) - South Africa's power crisis poses a threat to economic growth and the government's efforts to battle unemployment, poverty and other social ills, Deputy President Phumzile Mlambo-Ngcuka said on Monday.

Africa's largest economy has already been hit by the near collapse of the power grid in January and state-owned utility Eskom's subsequent decision to ration power indefinitely.

Investors worry key sectors of the economy, such as mining, could be buffeted by further turmoil if Eskom [ESCJ.UL] fails to increase power supply. Large gold and platinum mines shut down for five days at the start of the crisis in January. "If this situation is not addressed, it will call into question the many goals of socio-economic development that we have committed ourselves to," Mlambo-Ngcuka told an energy summit in Johannesburg.

Mlambo-Ngcuka, who once headed the mining and energy ministry, added that South Africans need to change the way they use electricity in the face of rising energy costs.

The electricity crisis has also raised fears power outages could blight the 2010 soccer World Cup in South Africa and might even prompt world football's governing body FIFA to give the tournament to another host.

The price of coal, which is the main fuel source for South African power stations, has risen sharply in the past year, squeezing Eskom's finances at a time when it is embarking on a 350 billion rand ($44.50 billion) infrastructure expansion.

The utility, which provides about 95 percent of the country's electricity, wants to double capacity by 2025 through building a number of coal-fired and nuclear power stations. There are already problems:

"Some timelines are going to be missed and some cost lines are going to be missed," Eskom Chief Executive Officer Jacob Maroga told delegates.

PRICE HIKES LOOM

Critics have accused President Thabo Mbeki's government of failing to invest in power generating plants despite signs almost a decade ago electricity demand was rising fast. Maintenance problems and a lack of skilled Eskom staff have worsened the crisis.

To shore up its finances, Eskom asked regulators to approve doubling electricity tariffs over a two-year period, triggering a backlash from the ruling ANC and its labour allies, who argued such hikes would hurt the poor and stoke inflation.

The utility has since backed off the demand, agreeing in principle to raise tariffs gradually over a five-year period.

The National Energy Regulator of South Africa is due to announce a decision on the tariff structure next week.