July 30, 2018 / 7:58 AM / 3 months ago

Eskom warns of likely South African power cuts due to protests

JOHANNESBURG (Reuters) - South Africa’s struggling state power firm Eskom warned on Monday that there was a high risk of electricity cuts this week, as wage protests disrupted its operations for the second month in a row.

Eskom, which supplies more than 90 percent of the electricity in Africa’s most industrialized economy, has been grappling with labor unrest as it tries to reverse a decade of steep financial decline by cutting costs.

It was forced to implement controlled power outages for three days in June after its initial refusal to raise salaries triggered a round of protests.

The threat of further outages had appeared to recede after Eskom offered to raise salaries by around 7 percent annually over the next three years, but trade unions want bonuses to be paid before they agree a wage deal.

“The current industrial action has negatively impacted plant operations at several power stations,” Eskom said in a statement. “Customers are advised to plan on the assumption that load-shedding will take place,” it added, using a term used in South Africa to refer to controlled power outages.

Eskom spokesman Khulu Phasiwe said on Twitter that a handful of power generating units were offline, including at the Matla and Arnot power plants.

A union source told Reuters that striking workers had affected operations at the Kendal and Duvha power stations.

President Cyril Ramaphosa has given his blessing for drastic measures to reform Eskom, and the dispute will test his commitment to reforms aimed at reviving sluggish economic growth.

Eskom is regularly cited as a threat to South Africa’s sovereign credit ratings because it has around 270 billion rand ($20 billion) of government-guaranteed debt.

The National Union of Mineworkers, one of the largest unions at Eskom, said payment of bonuses was a deal breaker. “Without a bonus, there will be no agreement,” it said in a statement.

Eskom said it planned to meet unions again on Friday after talks last week failed to settle the pay dispute.

Reporting by Alexander Winning, Tanisha Heiberg and Ed Stoddard; editing by David Stamp

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