By Gordon Bell
JOHANNESBURG, March 19 (Reuters) - South Africa's power situation has improved after a two-day crisis that threatened supplies to mines, state electricity firm Eskom said on Wednesday, but rolling blackouts were set to continue.
Eskom has been struggling to contain South Africa's power crisis, the result of years of underspending on electricity generation capacity, leading to mines shutting down in January and millions of homes left without power.
The company raised further anger and inflation fears on Monday when it said it wanted a 53 percent rise in power prices.
Central Bank Governor Tito Mboweni said Eskom could find other ways to fund its expansion programme than to raise prices by such a large margin, which is bound to make it more difficult to bring inflation back to a 3-6 percent target.
"I want to discuss (this) with both Eskom and the Treasury ... There are other ways we can (use) to make the pain somewhat less than it might be," he told reporters.
But Mboweni acknowledged that higher power prices may help change consumer behaviour and curb demand.
Investment bank Lehman Brothers said in a research note that a 53 percent price hike, instead of an agreed 14.2 percent rise, could increase inflation by a further two percentage points, pushing it over 10 percent.
"It would continue to add pressure to wage growth and second-round inflation effects, but we await further details and reactions from government and the ANC before formally shifting our inflation forecast," Lehman said.
"HIT CONSUMERS HARD"
South Africa's ruling African National Congress (ANC) said in a statement a further electricity price hike would hit the poor hardest.
"We find it unfair that while Eskom has not demonstrated any ability in dealing adequately with the current power crisis, they are eager to call for tariff hikes that would hit consumers hard in the pocket," it said.
Trade federation COSATU, an ANC ally, condemned the request and demanded that alternative sources of income be explored or that price increases be directed at heavy industry or the rich.
"If anything even approaching such increases were to be implemented the effects would be utterly devastating for the country," it said, adding it had declared a labour dispute with Eskom over possible job losses from power cuts.
Eskom plans to spend 343 million rand in the next five years and 1.3 trillion rand until 2025 to increase its generating capacity, including constructing new nuclear power plants.
The Eskom spokeswoman said rolling blackouts, known as load shedding in South Africa, would continue on Thursday, but there was likely to be full power for the Easter weekend from Friday.
A programme of blackouts was restarted on Monday as wet weather raised electricity demand.
The utility warned on Tuesday that power could be cut to the mines if two more of its 160 generators failed. At that time nine generators had tripped and another nine were shut down for maintenance.
The spokeswoman said four power generating units were back up on Wednesday, and the company was cutting up to 1,000 megawatts of power. On Tuesday, it cut 3,000 MW.
The electricity grid supplying Africa's biggest economy came close to collapse in January, forcing gold and platinum mines to shut down for five days. Since then mines have been operating below full power, driving up precious metal prices and raising fears of possible job losses and slowed growth.
