Eskom needs much more than a bailout, experts say

President Cyril Ramaphosa’s R230 billion bailout for Eskom will not cure the ailing power utility of its problems because they are far greater than a lack of money.

Energy expert Chris Yelland believed the only tangible action plan announced in the State of Nation address (Sona) for Eskom was the “front-end loading” of the cash injection, in the first years of the bailout, which was announced in the budget speech.

“Unfortunately this is not enough and does not address the root causes of non-cost-reflective electricity prices and the structural inefficiencies within Eskom, the electricity supply industry, and electricity distribution industry …

“So, after the bailout, the hole will continue to grow again until the root causes are addressed,” warned Yelland.

He said no details were provided by Ramaphosa on how government was going to deal with these underlying problem causes within Eskom – the utility which the president identified as a leading cause of South Africa’s gross domestic product’s (GDP) decline by 3.2% in the first quarter of 2019, due to load shedding.

“It seems to me the reason for the ongoing delays in presenting a clear country plan for the electricity supply industry is that no vision currently exists that enjoys broad support within the party and its alliance partners.

“This is a recipe for inaction while the elephants do battle,” said Yelland.

On Thursday night during his Sona, Ramaphosa announced government would table a special Appropriation Bill, on an urgent basis, to allocate a significant portion of the R230 billion fiscal support Eskom will require over the next 10 years, to the early years of the bailout, in order to save Eskom from falling apart.

He said since the load shedding this year, Eskom had made much progress in implementing its nine-point plan to ensure better maintenance of its generation fleet, reducing costs and ensuring adequate reserves of coal.

Business Unity South Africa (Busa) criticised Ramaphosa for not providing a clear time for implementations of recommendations from his advisory panel.

Busa president Sipho Pityana said: “The president’s pronouncements on Eskom are broadly in alignment with business’ view on how to deal with the crises engulfing the power utility, particularly the imminent appointment of a chief restructuring officer.”

“However, time frames were not announced by the president and we urge the president to publicly announce a clear time frame, with milestones, for the implementations of recommendations of his advisory panel,” Pityana said.

Pityana said a comprehensive plan and strategy on state-owned enterprises was still outstanding.

Ramaphosa said government would soon announce a new CEO for Eskom, as well as a chief restructuring officer to steer the utility.

He also said government would clamp down on municipalities and consumers who failed to pay for their electricity.

“The days of boycotting payments are over. We call on all our people who use electricity: let us pay up,” Ramaphosa said.

– gcinan@citizen.co.za

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