ANOTHER BAILOUT LOOMING

How would you destroy an iconic institution? Easy. Study Eskom, particularly since 1996. If you are dedicated to destruction, within a generation, you would have successfully killed off the dream of a new nation that started with much potential.

With it you’d have killed off any hope of transforming the majority of the citizens from low-income wage earners to join their white compatriots in a middle-income society.

This is what has been achieved by democratic SA, with Eskom now living from hand to mouth. The R5bn bailout that finance minister Tito Mboweni was forced to hand over to Eskom last month is the clearest testament to the government’s total commitment to killing off the utility. Presumably, this came from the R350bn the government has guaranteed to back Eskom’s R420bn (and growing) debt.

Officially, the bailout became necessary after the delay of a loan disbursement from China Development Bank. But any thinking person knows the real reason is that Eskom needed the money to report, misleadingly, that it has cash in the bank. It is a deceptive accounting entry designed to hide the reality of a bankrupt institution at the 2019 financial year-end.

Any thinking person knows Eskom has been gutted — by corruption, by mismanagement, by political interference, by lack of skills at the highest of levels. Any thinking person knows Eskom does not have sufficient working capital to remain a going concern.

In 2001, Eskom was the world’s best supplier of electricity — cheap, reliable and guaranteed to those already connected to the grid. For the years before that, and some years after, it was among the 10 best electricity producers in the world.

Killing off Eskom is one of those few things this government has done really well.

And with it the hopes of a nation blighted by massive unemployment, with more than a third of economically active citizens out of work and having no hope of getting a job. This bailout comes on top of the R69bn Mboweni committed the National Treasury to dishing out to Eskom over the next three years. Had Eskom not received the cash, it would have failed to settle debt obligations due at the end of March.

Emergency bailout

Again, in case you need any reminder: in 2015 Eskom received a R83bn bailout — R23bn in cash and another R60bn in a debt write-off. Then in February last year, the Public Investment Corp had to extend another emergency R5bn bailout as Eskom was again faced with the prospect of not being able to meet its financial obligations. Has electricity become cheaper since? Has all that cash finally fixed the utility? Not a chance!

While public enterprises minister Pravin Gordhan has been trying to convince all and sundry that the utility is not on the brink of collapse, the opposite is true. Standing between Eskom and collapse are the unlimited taxpayer funds in the hands of the same government that has brought about this disaster. I say “unlimited” because other incompetent, corrupt states have resorted to printing cash to delay the inevitable. Sensible as many in this government may be, that suicidal approach is not beyond any government.

Consider this: in the six months to September Eskom generated R27.1bn cash from operations. Then it paid R27.5bn to providers of debt to settle maturing borrowings. Another R17.7bn was paid in interest costs. What was left to spend on maintaining its ageing capital assets? Nothing. What was left to spend on expanding its generating network? Nothing.

You’d be forgiven for assuming a company that built its first power station in 1925 has finally got the hang of it. Instead, prepare for another bailout.

Any thinking person knows Eskom does not have sufficient working capital to remain a going concern