Pgm companies in South Africa suffered a blow yesterday (2nd December) after it emerged that the country could be faced with rolling black-outs in 2011 and 2012.

State utility Eskom has lodged an official request to increase electricity prices by 35 per cent each year for the next three years in order to offset an R80 billion funding gap.

However, it has also warned that the expected increase in demand as the economy recovers could create 'load-shedding' as the power infrastructure becomes "vulnerable".

"A worse-than-planned generation performance will result in higher risk and reduce system adequacy, especially during 2011 and 2013," read an Eskom statement quoted by Bloomberg.

Mining and smelting operations will now be hoping that the widespread rolling black-outs of January 2008 - which had a major impact on production levels - are not repeated.

Meanwhile, the African National Congress has heavily criticised Eskom's proposed price hikes, claiming that the majority of South Africans will find them "hard to afford".

"We see the Eskom proposal to the National Energy Regulator of South Africa (Nersa) not assisting South Africa's economic growth, especially its recovery from the recent economic recession," read a statement.

The party revealed that it will be making its own recommendations to Nesra, which will include a multi-pricing index and a "holistic and comprehensive approach to sustainable energy provisioning".

It was also confirmed today that Eskom will make a proposal for a $3.75 billion loan - which will be guaranteed by the ANC - to the board of the World Bank in March.

If approved, the loan would be the largest provided by the bank for any post-apartheid South African project, according to a report by Reuters.

In the wake of the 2008 crisis Eskom launched a five-year, R300 million plan designed to increase generation capacity in the country.

Sources:

South Africa May Face Power Black-Outs in 2011-2012, Eskom Says (02/12/09)

Eskom tariff hike won't help growth - ANC (02/12/09)

World Bank to expedite $3.75 bln SAfrica Eskom loan (03/12/09)

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