VZCZCXRO6452
RR RUEHDU RUEHMR
DE RUEHJO #0095/01 0720927
ZNR UUUUU ZZH
R 130927Z MAR 06
FM AMCONSUL JOHANNESBURG
TO RUEHC/SECSTATE WASHDC 4929
INFO RUEHJO/AMCONSUL JOHANNESBURG 1544
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SADC COLLECTIVE
RUEHBU/AMEMBASSY BUENOS AIRES 0001

UNCLAS SECTION 01 OF 03 JOHANNESBURG 000095 
 
SIPDIS 
 
SIPDIS 
STATE PASS USAID AND USGS 
 
E.O. 12958: N/A 
TAGS: ENRG PGOV ASEC SF
SUBJECT: SOUTH AFRICA: SERIOUS POWER DISRUPTIONS IN THE WESTERN CAPE 
 
REF: A) CAPETOWN 73, B)CAPETOWN 77, C) PRETORIA 618 
 
JOHANNESBU 00000095  001.2 OF 003 
 
 
¶1. SUMMARY:  (U) Recent power outages in the Western Cape have 
resulted in major financial losses in the retail and tourism 
industries, with the Cape Chamber of Commerce predicting losses 
in the millions.  Further outages and/or rolling blackouts are 
likely until Unit 1 of the Koeberg nuclear power station is 
brought back on line - potentially in May 2006.  Until then, 
state-owned electric utility Eskom will scramble to provide 
sufficient power to keep Cape homes and businesses functioning. 
Eskom and the Department of Public Enterprises are accelerating 
plans to build new power plants and recommission previously 
mothballed power stations to prevent further damage to business 
and South Africa's investment prospects.  Minister for Minerals 
and Energy Lindiwe Hendriks said on March 9 that logistical 
problems would not affect electricity provided to South Africa's 
neighbors. 
 
¶2. (U) On the political side, just one day before the March 1 
elections, Minister of Public Enterprises Alec Erwin said that 
the police and National Intelligence Agency (NIA) were 
investigating the damage at Koeberg, since the "the bolt that 
caused the generator's destruction did not get there by 
accident."  Erwin added the NIA was ready to bring criminal 
charges against individuals and that they were also looking at 
other power outages which could have been caused by sabotage. 
Opposition politicians from the Democratic Alliance (DA) said 
that Erwin's allegation amounted to an abuse of political power. 
 After substantial media and political furor, Erwin said on 
March 3 (two days after the ruling African National Congress 
(ANC) finished behind the Democratic Alliance (DA) in Cape Town 
elections) that references to sabotage had been media spin, and 
that he had not used the term sabotage.  END SUMMARY 
 
What Happened 
------------- 
 
¶3. (U) Since mid-November 2005, starting with the time when 
Koeberg's Unit 1 was first taken down for scheduled refueling, 
maintenance and modifications - leaving only Unit 2 in 
operation, the entire Western Cape province has been plagued by 
regular power outages.  According to Eskom spokesman, Fanie 
Zulu, these were initially of short duration and due to 
generation, transmission and distribution network breakdowns and 
overloads.  The immediate causes were identified as natural and 
technical events that coalesced to produce the blackouts.  These 
events included excess power through the lines, flashovers 
caused by mist and ash-dust coatings on insulators and 
sub-stations caused by the spate of bush fires in vulnerable 
areas. 
 
¶4. (U) Since mid-December, the Western Cape has been dependent 
on the 900 MW of electricity supplied by Unit 2 and some 2,200 
MW transferred from coal-fired power stations in Mpumulanga.  On 
January 19, Eskom's CEO Thulani Gcabashe announced that on 
Christmas Day, while in the process of being returned to 
service, Unit 1 generator set was damaged by a large loose bolt 
that had somehow gotten into the set.  Together with unrelated 
network faults, these set in motion a series of rolling 
blackouts throughout the province. 
 
¶5. (U) Gcabashe stated that Unit 1 was likely to remain down for 
between three and nine months while Eskom made repairs or found 
a replacement generator.  A spokesman for Koeberg said that 
security on maintenance, supervision and materials accounting 
had been strictly applied and that an investigation into how the 
bolt got into the generator was in progress. Sabotage and 
malicious intent were not ruled out. 
 
¶6. (U) Since February, Unit 2 has twice responded to system 
disturbances and insufficient power from Mpumulanga by removing 
itself from the system in controlled (programmed) shutdowns. 
These caused havoc to Cape Town's (and the region's) electricity 
supply.  The Cape Chamber of Business estimated that damage to 
the economy was in excess of $100 million, and that Eskom's 
reputation as a reliable energy provider was severely dented. 
Eskom board chairman Valli Moosa said it would take some time to 
get Unit 2 back to full capacity and that Eskom could currently 
only supply about 2,200 MW. 
 
Electricity in the Western Cape 
------------------------------- 
¶7. (U) The heart of the problem is that Cape Town lies some 
1,500 km from the major electricity supply center in Mpumulanga 
Province and that its demand for power exceeds available local 
supply.  The Western Cape has no natural energy resources and 
before 1984, when the Koeberg nuclear plant went on line, most 
of its electricity (and coal) was imported from Mpumulanga.  The 
long transmission line and rail route made electricity expensive 
and the distance at times created line instability resulting in 
 
JOHANNESBU 00000095  002.2 OF 003 
 
 
power outages in Cape Town.  The Koeberg nuclear power plant was 
built to remedy most of these short-comings.  It came online in 
1984 and is South Africa's only nuclear station.  The plant 
consists of two French-designed 920 MW reactors that have 
operated safely and efficiently for more than 20 years. 
 
¶8. (U) The Western Cape's daily demand for electricity averages 
about 3,700 MW, and peaks at around 5,100 MW in summer to 5,650 
MW in winter.  Supply is dependent on Koeberg's two reactor 
units which together supply a base load of 1,800 MW.  This is 
supplemented by the transfer of 2,000 to 3,000 MW (depending on 
the season and time of day) of power from plants in Mpumulanga. 
Transmission takes place over a 1,500 km, 400 kV line with a 
capacity of 3,500 MW - a secure load of about 2,900 MW.  Peaking 
or emergency power of some 1,500 MW is also available from two 
oil-fired gas turbine and two pump storage stations and two 
hydro plants. 
 
¶9. (U) With the full 1,800 MW from Koeberg the Western Cape 
needs to import a maximum of about 2,100 MW in summer and 2,500 
in winter, both comfortably within the transmission line 
capacity.  However, with one unit down imports become 3,000 and 
3,400 MW, respectively, which stretches the technical limits of 
transmission.  With both units out, the required imports for 
winter and summer (3,900 and 4,300 MW) exceed line capacity. 
 
Areas of Concern 
------------------- 
¶10. (U) The problem with reactor 1 being out of order is 
compounded by the fact that reactor 2 is running low on fuel and 
needs to be shut down for about 60 days for refueling and 
maintenance.  Eskom said that it will stretch Unit 2's reactor 
fuel cycle by running it at below capacity, hoping repairs to 
Unit 1 generator would be completed before reactor 2 runs out of 
fuel.  Nevertheless, Eskom estimates that the shortfall in 
supply to the Cape during the coming winter could be about 300 
MW, which will have to be catered for by scheduled supply side 
(load-shedding) and demand side (efficiency) management. 
 
Fallout 
------- 
¶11. (U) In the late February run up to the provincial elections, 
opposition political parties used the power problems in the 
Western Cape (the only hotly contested province) to attack the 
ANC-lead government.  Caught with little defense, Minister Erwin 
said that the National Intelligence Agency was investigating the 
damage at Koeberg and was expected to bring criminal charges 
shortly.  Erwin was widely quoted as saying that "the bolt that 
caused the generator's destruction did not get there by 
accident."  Minister for Minerals and Energy Lindiwe Hendricks 
made similar innuendos, saying that "the events (i.e. the power 
outages) curiously coincide with an important process in the 
democratic calendar of the country" and that "other forces are 
at play here." 
 
¶12. (U) DA leader Tony Leon characterized the comments - made by 
Erwin at a press conference in Cape Town on February 28 - as 
another example of the government's abuse of power, and ascribed 
the Koeberg damage to "negligence."  By March 3, Erwin denied 
reports that he said the reactor was sabotaged.  He said there 
was no evidence of a significant organized sabotage campaign, 
but that it was not an accident but an act of human 
instrumentality - "no one just dropped the bolt".  The 
accusations and counter-accusations continue in the media and 
parliament. 
 
¶13. (U) Concerns also revolve around the impact that the  power 
failures are having on the local economy and on investor 
confidence in Eskom's long-nurtured image as a low-cost, 
reliable supplier of quality electricity to South Africa's 
resource and manufacturing industries.  Questions concern 
Eskom's ability to deliver sufficient power for the country's 
economic expansion plans that include 6% GDP growth by 2010, and 
the soon-to-be-legislated Beneficiation Bill that aims to add 
value to the 70% of raw materials currently exported.  Both are 
heavily energy-dependent.  Mooted expansions in the resource 
industry include: BHP-Billiton's Mozal and Hillside aluminum 
plants in Maputo, Mozambique and KwaZulu-Natal, respectively; 
Alcan's potential new aluminum plant in the Eastern Cape; and 
major expansions in the platinum mining and ferro-alloy 
industries.  Failure by Eskom to ensure reliable and sufficient 
quantities of energy could severely impact these and other 
high-energy project plans. 
 
¶14. (U) A number of countries in the region import electricity 
from SA.  The potential squeeze on Eskom's generation capacity 
over the next few years, which was highlighted by the on-going 
blackouts in the Western Cape, has mobilized these countries 
into examining their energy vulnerabilities should SA reduce or 
 
JOHANNESBU 00000095  003.2 OF 003 
 
 
stop electricity exports. 
 
¶15. (U) Speaking at a regional hydropower conference, Minister 
for Minerals and Energy Lindiwe Hendriks said on March 9 that 
South Africa was not running out of power and that its internal 
problems should not affect supply to its neighbors.  Hendricks 
said that South Africa would not decide to cut down on its power 
supply agreements with Eskom's customers because of internal 
issues. 
 
Remedial Actions 
---------------- 
¶16. (U) Eskom executives and the Ministers of Public Enterprises 
and of Minerals and Energy have stated categorically that Eskom 
can and will be in the position to generate and deliver the 
power needs of the South African industry, given the huge 
amounts of capital that was budgeted for energy generation and 
infrastructure expansion over the next five to twenty years, 
amounting to some $20 billion.  Eskom claims that the Western 
Cape problems are unique, due to its location, lack of own 
energy resources, and the rapid expansion of demand for energy 
which is significantly beyond original estimates. 
 
¶17. (U) Thulani Gcabashe, Eskom's CEO said that Eskom was 
fast-tracking plans to build a combined cycle gas turbine 
generator in the Western Cape with a base load of between 1,800 
and 2,200 MW and that the board would make an investment 
decision in a couple of months.  Eskom also recently started 
building two peak-load oil-fired gas turbine generators, which 
would add 1,050 MW to the grid, and come on stream by April 
¶2007.  Similarly, the Department of Minerals and Energy has a 
tender out for two 500 MW Open Cycle Gas Turbine plants to be 
built in the region, but these will only be operational by about 
¶2008. 
 
¶18. (U) In the medium to longer term other options become 
available to the Western Cape, including the first unit of a 
pebble bed reactor (165 MW), power from the proposed natural 
gas-fired turbine plant in Namibia (using gas from the Kudu 
gasfield), and a similar 400 MW unit on the Cape west coast 
using natural gas from Forest Oil's Ibhubesi gas field.  The 
possibility of building a second conventional nuclear plant on 
the Koeberg site was also mention by Erwin. 
 
¶19. (U) Gcabashe and Erwin have agreed on the process for 
getting Unit 1 back on line.  The sequence would be to: borrow a 
200 ton rotor and stator bars from Electriciti de France and 
have the parts brought by barge to South Africa, probably within 
a month; synchronize Unit 1 with the power grid in the middle of 
May; refuel and service Unit 2 starting in the third week of May 
- there will be a week's overlap between starting of Unit 1 and 
the shutdown of Unit 2; run Unit 2 at decreasing power output 
over the next three months until stopped for refueling and 
maintenance towards the end of May; supply the electricity needs 
of the Western Cape from Mpumulanga.  During peak periods there 
could be a shortfall of some 300 MW, but Eskom is convinced that 
some 400 MW can be saved through demand-side and supply-side 
management innovations. 
 
¶20. (U) COMMENT: Eskom has stated on numerous occasions that the 
generation side of electricity supply is well under control (if 
somewhat tight under peak load conditions) and that the problem 
lies with a poorly maintained, old and out-of-date distribution 
infrastructure.  Most supply disruptions have resulted from 
equipment or line faults and are seldom due to insufficient 
generation capacity.  In addition, a number of transmission 
lines need upgrading to meet the ever increasing demand for 
power from an expanding economy and rapidly growing population 
base - some 70% of South Africans now have access to 
electricity, up from about 35% fifteen years ago. 
 
¶21. (U) Much of the blame rests with some 284 municipalities 
that buy bulk electricity from Eskom and distribute to 
rate-payers over their owned networks.  About 50% of 
municipalities have neither the skills nor resources to maintain 
their infrastructure.  To make matters worse, electricity 
revenues are used to cross-subsidize other services and not to 
maintain and renew equipment and systems.  As a consequence the 
SAG and Eskom developed the concept of regional electricity 
distributors (REDs) to overcome these problems.  Six REDs were 
to be established with pooled resources to cover the country and 
ensure stable, reliable and affordable electricity distribution. 
 The first mini-RED (the Cape Town Metro Area) went into 
operation on July 1 last year.  Unfortunately, legal and 
constitutional issues must be resolved before the next RED can 
be implemented.  An announcement on how to proceed is due this 
month.  END COMMENT. 
COFFMAN