Eskom has to restructure to reduce R450bn debt – De Ruyter

Eskom CEO Andre de Ruyter appeared before parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday to inform them that the power utility would going to have to “restructure its R450 billion debt”, Eye Witness News reported.

De Ruyter said the utility would not compromise on maintenance in the future.

However, he said that due to maintenance, constant load shedding outages would occur in the next 18 months.

De Ruyter told the committee that the utility had vowed to collect all the money owed to them by municipalities.

“We are progressively continuing to pursue enhanced revenue collection from municipalities that have not been paying as well as the residents of Soweto in particular. We are seeing an improvement,” said De Ruyter.

The power utility said that it was also looking at its contracts with suppliers at Kusile and Medupi, which have sucked billions from the company.

Mkhuleko Hlengwa, Scopa’s chairperson, said Eskom’s board was undermining parliament after chairperson Malegapuru Makgoba failed to attend the meeting despite the utility receiving billions of rand in bailouts.

Last year, Scopa placed Eskom on its priority watch list following an oversight visit to the power utility.

According to a report by Scopa, Eskom has been receiving qualified audits for three consecutive years in 2017, 2018, and 2019.

It suffered a R2.3-billion loss, R19.6 billion in irregular expenditure, and a debt of R380 billion in 2018.

In addition, Eskom faced several challenges including liquidity issues, leadership and governance issues, as well as operational challenges such as shortages and quality of coal, and power outages.

Eskom’s two new power stations, Medupi and Kusile, which were intended to come on-stream with additional capacity and provide a buffer for Eskom’s existing coal fleet, performed very poorly and are behind schedule.

The building of these coal-fired power stations, which started in 2007 and 2008, has been hit by cost overruns, poor engineering designs, labour problems and allegations of corruption.

The projects were initially budgeted at R79 billion for Medupi and R81 billion for Kusile.

However, due to delays and other defects identified during and post-construction, the costs of the projects have increased by more than R300 billion, currently reaching R145 billion for Medupi and R161.4 billion for Kusile.

The Medupi project commenced in 2007 and was scheduled to be completed in 2012, but it is still not fully functional.

The Kusile project commenced in 2008 and the projected completion date is now 2023.

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