President to act on Eskom

PRESIDENT Cyril Ramaphosa is today expected to announce plans to save Eskom. The Department of Public Enterprises had told Parliament that the power utility would reach day zero if it did not get a cash rescue by April.

Briefing the public enterprise portfolio committee yesterday, acting director-general Thuto Shomang said Eskom was technically insolvent; at its current trajectory it would cease to exist in a matter of weeks.

Speaking at the meeting, Public Enterprises Minister Pravin Gordhan said those responsible for corruption at Eskom should be imprisoned. Systemic corruption, malfeasance and fraud had compromised Eskom’s credibility, he said.

Shomang said the utility’s debt was standing at R435 billion, representing 15% of sovereign debt. “Any default at Eskom is threatening the economy.”

Cash generated by Eskom did not cover operating and debt servicing costs, Shomang said. The escalation of municipal and Soweto debt – totalling R28 billion – was growing at R1bn a month.

Gordhan noted that mismanagement, replacement of good people, and corruption, all together, had damaged “this very important institution. Today we deal with the culmination of effects of all that has happened before”, he said.

Gordhan said Ramaphosa had stated that security of supply was absolutely imperative for the economy and every household. “We will hear next Wednesday from the finance minister on financial support for Eskom from government given the fiscal constraints,” he added.

A financial solution was being sought, he said, but the Eskom debt was no easy matter. “It requires a fair amount of complexity and determination by government to ensure it is not a financial burden in the medium term.”

Asked how long load shedding would last, Gordhan said “I would like to assure that everything is being done to ensure we minimise load shedding.”

Shomang added that Eskom was struggling to maintain operational sustainability with its ageing generation fleet, which on average is about 37 years old.