Eskom’s R402bn debt issue worsens energy crisis in South Africa

*Power giant Eskom, which has been battling to meet demand from its old and poorly maintained plants, needs a massive capital injection to address the problem and reduce its environmental footprint in the Southern African country

Alexander Davis | ConsumerConnect

Sequel to years of bickering, South Africa yet appears no closer to finalising a plan to cut the state power utility’s R402billion (South Africa’s Rand) to more sustainable levels for the advancement of the country’s economy.

ConsumerConnect gathered Finance Minister Enoch Godongwana recently said he was favourably disposed to selling some of Eskom’s coal-fired plants, thereby freeing up funds for it to transition towards utilising more renewable energy.

However, Calib Cassim, Eskom’s Chief Financial Officer, told Johannesburg’s City Press newspaper that the government should ideally take over about half the utility’s debt.

President Cyril Ramaphosa of South Africa

Cassim reportedly stated that would enhance the process of securing green financing and attracting fresh investment.

The lack of consensus between the key players bodes ill for a speedy end to power outages that have hamstrung the economy since 2005, report said

Power giant Eskom, which supplies over 90 percent of the country’s electricity, bas been battling to meet demand from its old and poorly maintained plants.

The company reportedly needs a massive capital injection to address the problem and reduce its environmental footprint.

Nonetheless, the South African Government decided in early 2019 to split Eskom into generation, transmission and distribution units, with the aim of making it easier for them to raise funding and manage costs more effectively.

While the utility plans to seek approval from bondholders to spread the debt between the units, that process will likely hinge on a broader agreement on reducing its overall liabilities, according to report.