Eskom battles under mounting debt

HIGH levels of debt and default risk have left Eskom in dire straits as the power utility battles to meet demand.

The embattled parastatal is facing a R420 billion debt burden and the Department of Public Enterprises (DPE) says the State-owned entity (SOE) will cease to exist at the current trajectory by April this year.

The department, led by Minister Pravin Gordhan, on Wednesday briefed the Portfolio Committee on Public Enterprises on the issues emanating from the State of the Nation Address, progress in addressing audit findings of the Auditor-General on the department and SOEs for the 2017/18 financial year.

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Appearing before the committee, Eskom said it is technically insolvent.

“…[Eskom] will cease to exist at the current trajectory by April 2019. The high levels of debt currently are at R420 billion of the sovereign debt. Default risk is threatening the economy,” the committee said in a statement issued after the briefing.

At the SONA on 7 February, President Cyril Ramaphosa had announced a move to salvage the company, which would see Eskom be broken up into three divisions: Generation, Transmission and Distribution — all under Eskom Holdings, while at the same time, remaining the property of the State.

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In the subsequent SONA debate on Tuesday, Gordhan said the Eskom Board will appoint a panel of experts to do an assessment of all the power supply challenges that the utility has encountered over the past few days, as load shedding continues to intermittently plunge the country into darkness.

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