THE South African government is facing a mammoth task turning around Eskom where debt has increased to R500bn, according to Bloomberg News drawing on public records including bonds and issued loans.
The utility’s debt stood at R370bn a year ago. Whilst its CEO, Phakamani Hadebe declined to comment on the new number, he last month estimated debt to have risen to R450bn. Goldman Sachs described Eskom’s problems as the biggest threat facing the South African economy.
Eskom hasn’t been selling enough power to cover its operating costs and interest payments, and has been forced to implement rotating blackouts over the past few years to prevent a collapse of the national grid as its fleet of ageing and poorly maintained plants struggled to keep pace with demand.
Speaking at a conference hosted by Goldman Sachs, President Cyril Ramaphosa said Eskom was “too big to fail” and said efforts at resuscitating the organisation were afoot. But he ruled out privatisation.
“We are not privatising Eskom, we are restructuring Eskom, a process that will allow the private sector to be our partners – our partners in generation (and) our partners already in distribution,” said Ramaphosa.
In March South Africa was forced to repeatedly implement Stage 4 load shedding due to a combination of unplanned plant breakdowns, low diesel reserves, scheduled maintenance and the loss of power due to damaged transmission lined from Mozambique, said Fin24.
On Wednesday Ramaphosa said government has a “credible” business plan to get Eskom out of the “mess it is in”.
“It (the plan) has been tested and evaluated. It is credible and can be implemented and it is already being implemented.”
“We have also got to look at the debt and address the issue of debt, which is exactly what we are doing now with Treasury [and] with our lenders because it is so important and it’s too big to fail. We are not going to allow Eskom to fail because if Eskom fails this economy fails, this country also fails, so we are not going to allow that.”
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