After years of wrangling, South Africa appears no closer to finalising a plan to cut the state power utility’s R402 billion of debt ($27 billion) to more sustainable levels.
Finance Minister Enoch Godongwana last week said he favours selling some of Eskom’s coal-fired plants, freeing up funds for it to transition toward utilising more renewable energy. But Calib Cassim, Eskom’s chief financial officer, told Johannesburg’s City Press newspaper that the government should ideally take over about half the utility’s debt. That would smooth the process of securing green financing and attracting fresh investment, he says.
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The lack of consensus between the key players bodes ill for a speedy end to power outages that have hamstrung the economy since 2005. Eskom supplies more than 90% of the nation’s electricity, is battling to meet demand from its old and poorly maintained plants and needs a massive capital injection to address the problem and reduce its environmental footprint.
The government decided in early 2019 to split Eskom into generation, transmission and distribution units, with the aim of making it easier for them to raise funding and manage costs more effectively. While the utility plans to seek approval from bondholders to spread the debt between the units, that process will likely hinge on a broader agreement on reducing its overall liabilities.