Eskom being eaten alive now by its own debt

South Africa could be out of the woods this winter in terms of load shedding, an expert has cautiously predicted – but state power utility Eskom’s debt-to-revenue ratio is a greater long-term threat, which needs immediate attention.

The utility this week lost the use of an additional six generation units, prompting an escalation of load shedding from stage two to stage four.

“In winter, the bad news is that the demand is much higher because of the need for more heating, but the good news is that most of the maintenance is done in summer with lower demand,” said Andrew Kenny, an engineer with a special interest in power supply.

“All the machines should be available in winter. But whether we’ll make it through winter without load shedding is the question.”

Daily life has been severely disrupted with cellular communication down, traffic jams and the economy haemorrhaging.

Leader of the Good party Patricia de Lille said the recent escalated load shedding shone a light on the real and tragic effects of rampant corruption and cadre deployment during the last 10 years of the ANC administration.

“In 2008, Eskom still maintained a manageable R40 billion debt and sold in excess of 224,000 GWh – more than was sold last year, despite huge escalating expenses and staffing. Today, Eskom debt had ballooned to a reported R419 billion. Eskom’s income can no longer cover the interest on its debt, never mind pay this off,” De Lille said.

Kenny said that, since 1994, the utility was hit with bad management, corruption, failure to build stations, lack of maintenance and a disastrous BEE coal procurement system. The renewable energy programme could make matters worse.

“Wind and solar for grid electricity are staggeringly expensive and hopelessly unreliable. They have failed completely all over the world, including Germany, Denmark, the US, the UK and Australia,” Kenny said.

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