S African power outages enter 2nd day as workers protest

JOHANNESBURG: South Africa suffered power outages for a second straight day on Friday as workers protest over wages at national electricity provider Eskom, in a test of President Cyril Ramaphosa’s resolve to cut costs at struggling state companies.

Eskom, which produces more than 90 percent of South Africa’s power, said it would implement outages throughout the day because of an "illegal protest action" by some of its employees.

The rand currency weakened after Eskom said outages were planned for Friday and that there was a high risk of further disruptions over the weekend.

Cutting costs at troubled state entities such as Eskom is a top priority for Ramaphosa, and the current unrest will test his administration’s commitment to reforms that are needed to put a struggling economy on sustained growth path.

In 2015, severe power constraints caused a prolonged period of outages, hitting growth.

Eskom is regularly cited as a threat to South Africa’s credit rating because it has more than 220 billion rand ($16.4 billion) of government-guaranteed debt.

Eskom started controlled outages - known locally as "load-shedding" - on Thursday after it said protesters had blocked trucks carrying coal and buses ferrying staff to power stations.

Two large labour unions, the National Union of Mineworkers (NUM) and National Union of Metalworkers of South Africa (NUMSA), have threatened a total shutdown of Eskom’s operations unless it meets their demands for a 15 percent pay rise.

Eskom, which has obtained a court order declaring the labour protests unlawful, does not plan to offer any increase.

Eskom spokesman Khulu Phasiwe blamed the power cuts on acts of "intimidation and sabotage" by union members, but NUM and NUMSA said their members were respecting the court order and had done nothing illegal.

Phakamile Hlubi-Majola, NUMSA spokeswoman, said unions were willing to negotiate with Eskom but the power firm’s board had pulled out of a meeting called to resolve the impasse.

Public Enterprises Minister Pravin Gordhan, who oversees Eskom in Ramaphosa’s cabinet, on Thursday urged Eskom and unions to return to wage talks.

Ramaphosa oversaw the appointment of a new board and chief executive at Eskom in an effort to stabilise its finances after it became embroiled in corruption scandals under former president Jacob Zuma.

"This is about more than salaries.

The government has lost the moral authority because of the looting that went on at state firms like Eskom," said Ralph Mathekga, a political analyst.

"If Ramaphosa doesn’t intervene the lights will stay off and people will start asking: where is our president?"