Real Estate News - Eskom to Block Power to Some New Building Projects

March 5 (Bloomberg) -- Eskom Holdings Ltd., South Africa's national power utility, won't approve some construction projects for four to six months as it assesses an electricity shortage that shut most of the country's mines for five days in January.

``Factory size'' projects requiring more than 100 kilovolt- amperes won't be approved in the period, Andrew Etzinger, a spokesman for state-owned Eskom, said in an interview from Johannesburg today. Prior commitments will be honored, he said.

The country may be short of electricity until 2012 because of inadequate investment in power plants. The government delayed granting Eskom permission to expand for four years. Miners and other major industrial users have been restricted to 90 percent of normal power use since the mine closures.

Eskom will consider whether to supply power to developments on a ``case-by-case'' basis, Chief Operating Officer Brian Dames told reporters in Cape Town today. ``We can't sell something we don't have,'' Dames said.

Growthpoint Ltd., South Africa's largest real-estate investment company, has been told by Eskom that approval for power supplies for a property development in Johannesburg's Sandton area will be delayed by three to six months, Chief Executive Officer Norbert Sasse told the Johannesburg-based CNBC Africa television channel in an interview today. He didn't immediately return a call made to his mobile phone.

Mine Expansions

Beeld, a Johannesburg-based newspaper, today cited Eskom spokesman Tony Stott as saying the utility will block new construction projects bigger than houses over the next four to six months.

Eskom Chairman Valli Moosa and Finance Director Bongani Nqwababa, both members of Eskom's board, denied knowledge of such a ban in interviews in Cape Town today.

While Etzinger said he couldn't say which projects are affected, he also said it the ban will apply to mine expansions.

Eskom will know by the end of the week whether it's able to increase power supply to mines, Dames said.

``We have seen an improvement in Eskom's plant performance over the past few weeks'' and industrial customers had made an effort to help implement planned savings of 3,000 megawatts, he said.

``We have not seen a similar response from our retail customers, our municipalities, our commercial customers, our hotels, our banks,'' Dames said. ``The country has got no choice'' but to reduce power demand, he added.

Trevor Raymond, a spokesman for Anglo Platinum Ltd., the world's largest platinum producer, declined to immediately comment.

South Africa's construction industry grew at an annualized rate of 14.2 percent in the fourth quarter, underpinning the 5.3 percent annualized expansion rate of the whole economy.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

Article by: By Mike Cohen and Antony Sguazzin - www.bloomberg.com