Mbeki allays fears over power cuts
March 31, 2006
By From Bloomberg
Cape Town - South Africa's recent power outages would not affect the country's ability to attract foreign investment or meet its 6 percent growth target, President Thabo Mbeki said yesterday.
Cape Town has been plagued by blackouts in recent months as economic growth exceeded government forecasts, boosting demand for electricity, and a loose bolt damaged the country's sole nuclear plant. Africa's largest economy grew 4.9 percent in 2005, the fastest pace in 21 years.
"We have no evidence of there being an adverse impact on investment," Mbeki said in parliament yesterday. "We do not expect the outages in the Western Cape to derail" government's growth projections.
Eskom Holdings plans to spend R84 billion in the next five years to address the increased demand for electricity.
"The position nationally is that we have about 37 000 megawatts available, with an additional 2 000MW available to manage very high peaks," Mbeki said. "The projected demand is about 35 000MW."
The problem is being addressed, he said. New-generation projects will add 7 260MW of power in the next few years, and projects in the planning process would provide a further 10 382MW, Mbeki added.
He dismissed a request by opposition parties to appoint an independent panel to investigate the country's failure to meet its electricity needs.
Companies in the Western Cape had lost R5.6 billion over a two-week period because of the blackouts, while the total cost to the economy was R8.9 billion, according to the Cape Regional Chamber of Commerce and Industry.
BHP Billiton has said it might delay expansion in South Africa because the country was running out of cheap and abundant electricity.
Power cuts in Johannesburg and Cape Town shut oil refineries, halted textile mills and plunged millions of homes into darkness. Investments by Alcan and OAO Sual Group might also be under threat.
Smaller businesses also are paying the price. Cape Town's Mount Nelson Hotel said it might have to spend R4 million on generators. "The last thing I need is cold and unhappy guests," said managing director Paul Seewer. The hotel's penthouse suite costs about $4 700 (R29 751) a night.
Power cuts in February caused 5 800 litres of milk to sour and damaged the health of calves at a farm near Franschoek, said Bartie Volschenk, farm manager for Rhodes Food Group.
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