[A-List] Power Struggle: In Africa, Outages Stifle a Boom; Electricity Cuts Plague 35 Nations

["Yoshie Furuhashi" <critical.montages@xxxxxxxxx>]

<http://online.wsj.com/article/SB120838247003120827.html?mod=googlenews_wsj>
PAGE ONE
	
POWER STRUGGLE
In Africa, Outages Stifle a Boom
Electricity Cuts
Plague 35 Nations;
Waiting in Gakuto
By SARAH CHILDRESS
April 17, 2008; Page A1

(See Corrections & Amplifications item below.)

JOHANNESBURG, South Africa -- The global commodities boom is claiming
another casualty: Africa's already-shaky power grid.

With the continent's power-hungry mining sector booming and the
economy along with it, national electricity grids are fraying. Higher
prices for coal and oil are only intensifying the strain on
electricity companies.

The poor in South Africa's sprawling townships have long been used to
power cuts. Now, upscale shoppers here browse darkened malls, while
moviegoers are accustomed to outages disrupting shows. In nearby
Botswana, plans to bring electricity to rural villages are threatened
as the government struggles to maintain power at the nation's diamond
mines.

Frequent and disruptive power outages plague about 35 of sub-Saharan
Africa's 47 countries, according to the World Bank. The situation is
triggering violence and threatening deeper instability across a region
already wracked by unrest. Residents of impoverished Port Harcourt,
Nigeria, enraged at paying for inconsistent or nonexistent
electricity, recently have chased away the power company's bill
collectors with machetes.

In South Africa, Eskom, the government-owned power company, is taking
drastic actions to prevent its national grid from collapsing
altogether. Last month, it petitioned federal regulators to allow it
to hike rates by more than 50% -- a stinging increase designed to curb
demand. It also reduced power to the country's robust mining industry.
The drop in capacity has helped elevate international gold and
platinum prices.

DARKNESS IN GAKUTO

• Botswana Village Waits for Lights to Come On
<http://online.wsj.com/article/SB120768394261398951.html?mod=Leader-US>

"The situation is critical," says Steve Lennon, Eskom's managing
director for resources and strategy. The company has had to resort to
scheduled outages since January, and recently warned that additional
cuts may be necessary.

In a rare mea culpa, South African President Thabo Mbeki apologized
for the electricity shortages during his February state-of-the-union
address. He declared the situation to be a "national emergency" and
vowed to confront the problem.

Unreliable power poses a major constraint on the region's economic
development. Much of sub-Saharan Africa still operates largely on the
margins of the global financial markets, isolating it from the
economic turmoil buffeting the developed world. Booming commodity
prices of the past few years, however, have made the region attractive
to foreign investors. Now the electricity crisis is damping their
enthusiasm.

"It's one of the biggest concerns for the business community," says
Vivien Foster, the World Bank's lead economist on sustainable
development in Africa.

Economic Impact

Outages are costing African economies as much as 2% of their gross
domestic product, according to World Bank estimates. For big
businesses, outages are reducing revenue by as much as 6%, according
to the bank's surveys of manufacturing firms in Africa. Sales losses
can approach 16% for smaller companies operating in the continent's
vast, informal economy. These include unregistered convenience shops
and hair salons that serve many African cities and villages.

Power for most Africans is still a luxury. Just under a quarter of
sub-Saharan Africa's population has access to electricity in the first
place, and that is concentrated in urban areas. Africa has the
capacity to generate about 63 gigawatts of power for roughly 770
million people -- about what Spain produces for its population of 40
million. For most African countries, the World Bank estimates that
universal access to electricity is at least 50 years away.But these
days, even the few who have come to expect electricity are finding it
increasingly difficult to come by -- or afford.

Falling Behind: Power generation capacity, megawatts per one million
inhabitants:
<http://s.wsj.net/public/resources/images/P1-AL228A_AFRIC_20080416213619.gif>

New plants -- some powered by coal or oil -- can take years to build,
so some countries are resorting to pricey emergency measures: They're
using generators powered by diesel or other fuel and attempting to
store up extra coal to feed existing plants. All this is happening
just as energy prices are rising, which means they can't afford enough
coal, or enough oil, to fill the gaps.

"We pay a bill this week, and put off another one," says Ibrahima
Coulibaly, an accountant for a construction firm in Dakar, Senegal.
Sometimes, he says his children's school fees go unpaid so that he can
pay his electricity bill, which has shot up 88% over the past three
years due to escalating oil prices. "You have to make a choice between
what is indispensable and what is superfluous," he says. "Electricity
is indispensable."

Africa's power crisis is halting or reversing modest efforts in recent
years aimed at bringing cheap electric power to rural areas.
Economists call these residents the "energy poor," because without
lights or the ability to power new technologies or appliances, people
have difficulty competing or progressing in a modern world.

One of the hardest hit regions so far is South Africa, the continent's
largest and most vibrant economy. Since 2000, the country's gross
domestic product has more than doubled, from $133 billion in 2000 to
$272 billion last year. The country's power grid hasn't kept up.
Despite warnings from Eskom in 1998 of an impending crisis, the
government didn't order new plants built until 2004.

The country has Africa's most developed infrastructure -- from busy
freeways to speedy Internet connections -- lending it a first-world
feel. Johannesburg, the commercial hub, is home to a burgeoning stock
market and wealthy gated communities. The country also has vast
reserves of diamonds, platinum, gold and other metals that it hauls
from some of the world's deepest mines.

On the country's southern coastal tip, Cape Town boasts sprawling
beach homes. Amid the past few years of sharply rising commodities
prices, the mining-heavy economy here has thrived. Investment bankers
and private-equity investors are rushing to scout for deals.

The power-intensive mining industry puts additional strain on the
grid. Mining companies have had to dig deeper in recent years to get
access to dwindling reserves. That requires more electricity. The
mining industry, responsible for 7% of the country's economic output,
draws 17% of the country's electricity production.

Last year, Eskom found itself unable to meet demand for the first
time. Blackouts this January snarled traffic as many stoplights in
Johannesburg went on the blink. Retail stores reported a spike in
thefts during power outages and some restaurants have invested in
costly generators to keep customers coming.

South Africa's cuts are roiling neighbors. That's because Eskom
exports power to much of the region. In copper-rich Zambia, South
Africa's outages forced the country's largest mining company to
suspend operations altogether in January. Electricity demand in
Botswana, a big diamond producer in southern Africa, is growing at 8%
a year. Diamond mines suck up roughly half of the country's overall
consumption. South Africa is now cutting back on the electricity it's
willing to sell to the country.

Botswana's Sole Plant

Also at risk: government-funded electrification efforts aimed at
bringing power to the countryside. Botswana has only one coal-fired
power plant. In the past, it has relied on cheap imports from South
Africa for 70% of its electricity needs. Eskom has said it will cut
Botswana's share of power in half by 2010, leaving the country
scrambling to find other solutions or face a crippling shortage.

Map: "Tapped Out: Sub-Saharan Africa has been prone to frequent power
outages due to: natural causes; oil price shock; system disrupted by
conflict; and high growth, low investment":
<http://s.wsj.net/public/resources/images/P1-AL204A_AFRIC_20080416190105.gif>

Energy Minister Ponatshego Kedikilwe acknowledged earlier this year
that Botswana had an "emergency" situation. "With the rate of demand
and levels of growth one could say that should've been anticipated,"
he said during a recent news conference. He noted that the government
was looking into energy-saving measures -- such as public awareness
campaigns -- to reduce demand.

Botswana officials are also in the process of expanding the country's
sole power plant and are soliciting bids from independent power
producers. Given those measures, Mr. Kedikilwe predicts that by 2011,
Botswana will actually have a small electricity surplus.

For now, though, the country's crisis has endangered a new government
project to bring electric power to the country's energy poor in about
100 rural villages. Last fall, the government installed power lines
connecting the bush village of Gakuto, about 12 miles from the capital
Gaborone, to the national grid. The village is a collection of tidy
homes scattered along red-dirt paths. The lack of electricity makes
Gakuto a quiet town. Without lights or refrigeration, there are few
shops and no running water.

The prospect of power in the village excited its 1,500 residents, many
of whom moved from other rural areas because they could afford to buy
their own homes here. Eager Gakuto residents paid about $130 each to
wire up their homes when they heard about the electrification project.
That's a major sacrifice considering some make as little as $75 a
month.

The effort got off to a rough start. Late last year, vandals stole
some of the town's wiring, delaying the launch. The government said
that it would replace it, and then Gakuto would be back on the
schedule. Then the power crisis struck, and the village is still
waiting. The energy minister, Mr. Kedikilwe, says that the rural
electrification program won't be derailed by the power crunch. But
Botswana is already struggling just to keep the lights on in the
capital.

At the Ministry of Minerals, Energy and Water Resources in Gabarone,
the halls remain dark and un-air-conditioned. A sign on the elevators
warns of spontaneous power cuts and advises would-be passengers to
ride at their own risk.

Dreams on Hold

In Gakuto, middle-class residents are putting their own dreams on
hold. When the Bika family learned that electricity was coming to
Gakuto, they built a small slaughterhouse and bought a deep freezer
for their chicken farm. They wired the chicken coops for electric
lighting. Under bright lights, chickens eat constantly, fattening up
for slaughter. But the Bikas' 2,000 scrawny chickens now peck
halfheartedly at the feed under smoky, paraffin lanterns. Without
electricity for refrigeration, slaughtered chickens rot within hours,
so the Bikas have to sell the birds live to local families. The family
tried to run the new freezer on a diesel-powered generator. But fuel
costs ate through more than $1,100 a month.
[Boitumelo Bika]

"I can't progress if there's no electricity," says Boitumelo Bika, the
elegant family matriarch, her thick braids twisted into a bun. "That's
why I sit, and fold my hands."

Some countries like Ghana and Senegal depend on imported oil and
natural gas to fuel their power plants and are now struggling to pay
mounting bills. In Senegal, the government relies on imported oil to
fuel all but 66 megawatts of its 623-megawatt-capacity grid. When oil
prices soared past $100 a barrel, the government, which subsidizes
electricity prices, was hit hard. The government has spent more than
$300 million in unplanned subsidies since 2004 to ease its citizens'
rising electricity costs and is anticipating another difficult year,
as the prices climb month-to-month.

The spending has sucked the government dry at a time when it needs
cash to upgrade its beleaguered power grid. "The government doesn't
have a penny to invest in the energy sector," says Mohamadou Diop, an
independent energy consultant in Dakar. The government can't match the
price rises with new subsidies and is being forced to pass on some of
the higher costs to consumers. Prices have risen 15% in just the past
few months, leaving much of the power-addicted middle class
struggling.

Like many up-and-coming Dakar residents, Demba Falldiop, a sales
representative for an import-export company, was building a second
home to rent out in the hopes of capitalizing on rising housing costs
in the booming capital. Just as the walls were going up, however, Mr.
Falldiop had to halt construction because of soaring power bills.

"I have another one I'm going to pay right now," he said, pulling an
invoice from the pocket of his orange robe. The bill, for two months
worth of power, is for about a fifth of his monthly salary.

--Elizabeth Dickinson contributed to this article.

Corrections & Amplifications

Sub-Saharan Africa comprises 47 countries, according to the World
Bank. A previous version of this page-one article Thursday incorrectly
gave the number as 53. In addition, Botswana's capital is Gaborone.
The city's name was misspelled in the article as Gabarone.

-- 
Yoshie
<http://montages.blogspot.com/>