South Africa Faces Weekend Blackouts Amid Eskom Pay Protests

June 15, 2018
The protests come at a tough time for Eskom and the South African economy more broadly

(Bloomberg) -- South Africans are bracing for a weekend of rolling blackouts as protesting workers at the state-owned power utility continue to disrupt the national power grid.

Eskom SOC Holdings Ltd., which generates almost all of the nation’s electricity, is locked in a dispute with workers after wage talks broke down last week over the state-owned utility’s insistence that it can’t afford pay increases. The company began cutting power to some areas Thursday night for the first time since 2015, as demonstrators blockaded roads and attacked staff.

There’s “high risk” of cuts over the weekend, the utility said in statement. Rolling blackouts have been scheduled until 9 p.m. local time Friday.

"It’s going to be like this until the wage dispute is resolved," spokesman Khulu Phasiwe said by phone. “Acts of intimidation and sabotage” continue to threaten security of supply, following similar protests Thursday, he said earlier.

The protests come at a tough time for Eskom and the South African economy more broadly. Beside the seasonal increase in demand for electricity over the southern hemisphere winter, Eskom has also battled coal shortages, allegations of corruption and mismanagement, and struggled to raise the funding it needed earlier this year. And a prolonged repeat of outages from three years ago would undermine signs of recovery in Africa’s most-industrialized economy.

“This strike will be hugely detrimental to the fragile SA economy,” the Energy Intensive Users Group of Southern Africa said in a statement. The group’s 32 members represent 40 percent of the country’s power consumption.

Court Order

The utility got a court order declaring the protests unlawful and prohibiting the intimidation of other workers and contractors. Employees are also barred from hijacking coal trucks and sabotaging Eskom’s electricity infrastructure.

Members of Eskom’s biggest unions planned to picket during their break midday on Friday, when the activity is allowed, Livhuwani Mammburu, a spokesman for the National Union of Mineworkers, said by phone. Legally workers are not permitted to strike because the power producer is considered to provide an essential service.

The unions are waiting to hear from the Commission for Conciliation, Mediation and Arbitration about the next steps after the dispute was referred to mediation, Mammburu said.

“We are not on strike,” Phakamile Hlubi, a spokeswoman for the National Union of Metalworkers of South Africa, said late Thursday. The unions delivered a memorandum to Eskom headquarters earlier in the day demanding a 15 percent salary increase.

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