Electricity shortages hobble South Africa's growth: Nene

Power outages are the biggest brake on South Africa's economic growth, Finance Minister Nhlanhla Nene said Monday, as factories, homes and offices across the country continue to suffer from long electricity cuts.


South Africa is forecast to grow at two percent this year, far below the rate needed to ease high unemployment and growing frustration among many young blacks more than two decades after the end of apartheid.

"The most pressing risk facing us at the moment is the energy generation," Nene told foreign correspondents at a briefing in Johannesburg.

"We are concerned at the negative impact that electricity constraint is having on our growth and potential growth."

Load-shedding -- scheduled power cuts to reduce energy usage -- has become part of everyday life for many people and companies in South Africa.

State-owned power company Eskom, which generates more than 95 percent of the country's electricity, has been weakened by years of underinvestment and ageing infrastructure, as well as governance problems.

"Ensuring that Eskom returns to full financial and operational sustainability is our top priority as government," Nene said.

Late Monday, Eskom chief executive Tshediso Matona, suspended since March and just six months after his arrival, left his post by mutual agreement "on an amicable basis," Eskom said in a statement.

It added that "no misconduct or wrongdoing is alleged by Eskom against Mr. Matona".

"With the separation, the inquiry initiated by the board into the state of affairs at Eskom will continue as planned," the statement read.

In seven years, Eskom has had six chief executives or interim CEOs.

Nene also said the country's electricity shortages were due to "inadequate maintenance of the power plants and distribution networks resulting in deteriorating and unreliable performance".

"Load shedding is part of trying to address the problem," he added.

Eskom's new Medupi power station is due to generate its first electricity in June, though its start schedule has been repeatedly delayed.

South Africa's economy grew 5.6 percent in 2006 but the growth rate has since been in steep decline.