(3 minutes read)
· The Eskom debt escalated from R440 billion in the past financial year to the present level of R488 billion
· In 2020, Eskom was given R49 billion
· Another, R56 billion was committed for 2021, which is largely meant for debt servicing
· Eskom management recently faced tough questions by lawmakers as it presented its annual report to parliament’s portfolio committee on public enterprises
· The prick point was relating to R488 billion, which the power utility owes to the state as a guarantee extended by the state.
Eskom management recently faced tough questions by lawmakers as it presented its annual report to parliament’s portfolio committee on public enterprises. The prick point was related to R488 billion, which the power utility owes to the state as a guarantee extended by the state.
The Eskom debt escalated from R440 billion in the past financial year to the present level of R488 billion. This has been a major source of concern in various quarters, including international ratings agencies, as the government continued to plough funds into the entity. Recently, S&P and Moody’s downgraded South Africa, mainly driven by its huge domestic and external debt.
In 2020, Eskom was given R49 billion. Another R56 billion was committed for 2021, which is largely meant for debt servicing. Eskom’s creditors were a combination of domestic and foreign lenders, between bond, development financing institutions and export credit agencies.
Some R330 billion of the R488 billion is already guaranteed by National Treasury Payment of guaranteed debt would allow the company to once again go into the market and raise further guaranteed debt, if it wants, with the support of the shareholders and National Treasury.
Eskom posted a net loss of R20.5 billion in the full 2020 financial year. The power utility hopes to return to profitability from 2023. Eskom would look to approach the Department of Public Enterprises and National Treasury to extend its guarantee facility, as each year there are maturities that become due and payable.
The power utility is also pitching for increasing the power tariff and is the view that charging the prices that do not cover the cost was not sustainable. According to Eskom, the gap between the desirable and the present tariff is in the region of 25-30%. This, the utility says, should be addressed.
The power utility has made presentations to the Energy National Energy Regulator of South Africa (Nersa) for additional tariff increases, more than the 5.22% already approved for 2021/22.
