Eskom relies on an aging coal fleet and South Africa has faced intermittent power outages for more than a decade.
South Africa’s state-owned utility Eskom and workers’ unions have signed a wage deal, paving the way for a possible resolution of the worst power outages in two years.
Struggling Eskom and its three recognized unions signed off on a 7 percent wage increase a week after they began implementing extended blackouts. blaming them on the striking workers hampering efforts to bring failed power units back online.
The company said power would still take time to restore and urged staff to return to work to begin the process.
“As a result of the strike, maintenance work has had to be delayed and this backlog will take time to clear,” it said in a statement.
Eskom relies on aging coal fleet which is highly error prone. South Africa has faced intermittent power cuts for more than a decade, hampering economic growth.
The so-called “Stage 6” outages imposed by Eskom since last week mean at least six hours without electricity every day for most South Africans. The last time they were this bad was in December 2019.
Already saddled with unsustainable debt levels and tariffs that are not yet cost-reflective, Eskom said the wage increase “will be difficult for Eskom to afford”.
Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said that while the wage agreement was positive, “overall, affordability issues persist. It doesn’t really make Eskom’s more significant challenges go away.”
Small businesses have borne the brunt of recent disruptions, while still feeling the effects of the COVID-19 pandemic and inflation, which is at a five-year high.
“These disputes are always settled in the end,” energy analyst Chris Yelland told broadcaster eNCA. “The question is how much damage is done in the course of achieving that goal.”