Letter from Cape Town

I am reliably informed that winter is here. Coming to terms with 20 degrees and sunshine as winter is fine by me. What happens here in winter is that the lights go on at 6pm, the underfloor heating is switched on and the power drain is boosted. I was hoping to get away with not writing about power cuts again, as I have done for the last two articles, but it is difficult to miss.

Electricity provider Eskom says we should anticipate frequent load shedding for the next three months. This is supposed to be a managed and predictable process but to date we have had three cuts in three days that none knew was likely to happen.

Consequences of these cuts are major. No power means that pumps don't work. If pumps don't work, sewage can't be processed. Last month raw sewage was spilling out of the informal settlements into the rivers and coastal waters. We are assured the problem has been rectified but more power cuts will have consequences.

We need a new reactor, we need football stadia, we need resources

So where is the link with this and the industry I write about?

The Koeburg effect

Eskom runs a nuclear power plant named Koeberg, 30km north of Cape Town. Koeberg has two reactors, one of which failed because a technician dropped a bolt into a cylinder, which severely damaged the enclosed rotor beyond repair. This has meant closing one reactor while awaiting a part from France, which arrived last week. Meanwhile the fuel on the operating reactor is running low and it is operating at 60% capacity. Once the other reactor is repaired, the remaining one needs to be closed down for refuelling. We will be up 40% but down 50% overall on available power.

The demands of the 2010 World Cup have not yet hit the industry in the way the Olympics will soon hit London

It has been muted that another nuclear reactor be built - but there are risks associated with it. We are facing a shortage of skilled labour and construction professionals and are also suffering material shortages. The demands of the 2010 World Cup have not yet hit the industry in the way the Olympics will soon hit London.

We need a new reactor, we need football stadia, we need resources. Currently many workers are focused on the private sector as they have become victim of black empowerment and are unable to work for government. How do you refocus the workforce?

Further developments around 2010 are the announcement that the ANC, which has subsequently lost local control in Cape Town following local elections, signed up for 2010 without reading the FIFA small print. The World Cup is likely to cost the city an extra R24m (£1.91m) in planning alone and the new Green Point stadium in Cape Town is likely to double its cost to R3bn.

The deputy president said the search for skills would start in South Africa but would extend overseas

Bringing back the expertise

Compounding all of this is the skills shortage. The professionals are still leaving for the UK and Australia, some are even leaving to become farmers as the pressure is getting to them. I notice JP Morgan is advertising here for staff to join their London office, as are QS practices and contractors. Much of the migration of professional labour has been driven by a commendable initiative by government to empower the black population and ensure that they take 21% of ownership of businesses by 2010. There are people being appointed to positions they are not quite experienced for instead of those who are but have different origins. This is fine but there needs to be a period of transition and handover to ensure the risks I have outlined are managed. Good project management practice in other words.

Recognising the problem potentially becoming a catastrophe, deputy president, Phumzile Mlambo-Ngcuka has announced that "nothing short of a skills revolution... will extricate us from the crisis we face". There is a planned implementation of a R372bn three-year infrastructure development programme. The deputy president said the search for skills would start in South Africa but would extend overseas - and restrictions could also be loosened in order for this to succeed.

The key areas of shortage are city, urban and regional planning; education, health and engineering specialists; and communications. It will be interesting to see what impact this will have on both UK and South African resources.