LIGHTENING THE DEBT

than normal electricity price increases to be able to meet its financial obligations.

To arrest this situation, Eskom will limit its investment expenditure to the upper limit of R60bn a year until its financial situation stabilises, says spokesperson Khulu Phasiwe.

Reductions will be on assets such as new transmission lines, particularly those that are planned to connect the new independent power projects that government was meant to implement in the third and fourth rounds of its IPP projects.

“We will not cut expenditure on maintenance,” says Phasiwe. There is also no question of stopping the building programme at Medupi and Kusile. These are 90% and 80% complete, respectively, and Eskom would incur unaffordable penalties should it mothball any parts of them. They also are now helping to contribute revenue, as most generating units have been connected to the grid.

Three generating units at Medupi and one at Kusile are in commercial operation already, as building on them is complete.

One generating unit at Medupi was synchronised into the grid in April and is undergoing tests before it is released into commercial operation within the next three months. Another two Kusile units are also contributing to the grid, and should enter the commercial stage within six months.

Other measures to arrest spiralling costs will be unveiled once the utility agrees on a new shareholder compact with the public enterprises minister, expected in October, says Hadebe. Other than significantly slashing its headcount, Eskom will have to look at decommissioning four old power stations that have exceeded their useful lifespan of 50 years.