RIO Tinto Group, the company fending off a US$114-billion offer from BHP Billiton Ltd, may be forced to delay a South African aluminum smelter because Eskom Holdings Ltd says it can't supply enough power for the project.

Eskom, South Africa's state-owned electricity monopoly, may renegotiate a power agreement it signed with Alcan Inc, prior to that company being acquired by Rio, Eskom Finance Director Bongani Nqwababa said yesterday. Amanda Buckley, a spokeswoman for Rio in Sydney, declined to comment.

"We might be approaching them for a review," Nqwababa said in an interview with Bloomberg News. "You can't sell what you don't have."

In November 2006, Alcan signed a 25-year power pact with Eskom starting in 2010 to ensure supply for a planned US$2.7 billion aluminum smelter in the country's Eastern Cape province. The smelter, slated to produce 720,000 metric tons initially and one million tons once expanded, would be Africa's biggest and one of the largest foreign investments ever in South Africa.

The project may become the first major casualty of the government's four-year delay in deciding how to expand power generation, and its failure to anticipate the strength of growth in the economy and demand from business. Most areas of South Africa have been without power for 2 1/2 to five hours a day this week.

Industries that are heavy power consumers, such as aluminum and chrome smelting, should avoid planning expansions before Eskom starts building up capacity in 2013, Nqwababa said.

"It's a risk, it's a huge risk" for the nation, Colen Garrow, an economist at Brait SA, said from Johannesburg. "It's going to retard our economic growth."

The government delayed a decision on expanding electricity generation by four years to 2004, while economic growth rose to 5.4 percent in 2006, the fastest rate since 1981. In the third quarter of 2007, a construction boom pushed growth to a faster-than-expected 4.7 percent on an annualized basis.

Expansions of mines and developments such as shopping malls shouldn't be affected by the power shortage, Nqwababa said.

"What I am talking about is high profile projects of the smelter variety," he said.