June 15, 2018 / 6:11 AM / 5 months ago

UPDATE 5-South African power outages enter 2nd day as workers protest

* Worker protests trigger controlled power cuts

* Outages hurt economic output in 2015

* Unions want 15 pct pay hikes, Eskom offering no raises

* Minister says two sides have agreed to talk

* Standoff is key test for President Ramaphosa (Adds public enterprises minister’s comments)

By Alexander Winning

JOHANNESBURG, June 15 (Reuters) - South Africa suffered power outages for a second day on Friday as workers protested over wages at national electricity provider Eskom, in a test of President Cyril Ramaphosa’s resolve to cut costs at struggling state companies.

Public Enterprises Minister Pravin Gordhan said late on Friday Eskom and the unions had agreed to resume talks immediately on conditions that include Eskom makes a pay increase offer and operations return to normal.

“The parties have agreed that the current disruptions at Eskom that resulted in load-shedding since yesterday are not beneficial to either party nor the country and the economy,” Gordhan said in a statement.

Eskom, which produces more than 90 percent of South Africa’s power, said it would implement outages throughout the day because of an “illegal protest action” by some of its employees.

The rand currency weakened after Eskom announced the outages and said there was a high risk of further disruptions over the weekend.

Cutting costs at troubled state entities such as Eskom is a top priority for Ramaphosa, and the unrest will test his administration’s commitment to reforms aimed at putting a struggling economy on sustained growth path.

In 2015, severe power constraints caused a prolonged period of outages, hitting growth.

Eskom is regularly cited as a threat to South Africa’s credit rating because it has more than 220 billion rand ($16.4 billion) of government-guaranteed debt.

Eskom started controlled outages - known locally as “load-shedding” - on Thursday after it said protesters had blocked trucks carrying coal and buses ferrying staff to power stations.

“INTIMIDATION AND SABOTAGE”

Two large labour unions, the National Union of Mineworkers (NUM) and National Union of Metalworkers of South Africa (NUMSA), have threatened a total shutdown of Eskom’s operations unless it meets their demands for a 15 percent pay rise.

Eskom, which has obtained a court order declaring the labour protests unlawful, has offered no pay increases.

Eskom spokesman Khulu Phasiwe blamed the power cuts on acts of “intimidation and sabotage” by union members, but NUM and NUMSA said their members were respecting the court order and had done nothing illegal.

Ramaphosa oversaw the appointment of a new board and chief executive at Eskom in an effort to stabilise its finances after it became embroiled in corruption scandals under former president Jacob Zuma.

Political analyst Ralph Mathekga said: “This is about more than salaries. The government has lost the moral authority because of the looting that went on at state firms like Eskom.

“If Ramaphosa doesn’t intervene the lights will stay off and people will start asking: where is our president?” ($1 = 13.4449 rand) (Additional reporting by Ed Stoddard and Olivia Kumwenda-Mtambo Editing by Joe Brock and Robin Pomeroy)

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