Eskom wants government to take over majority of its debt

Eskom wants the majority of its R440 billion ($29 billion) of debt transferred to the South African government.

The struggling state power utility said it can only sustain R160 billion of debt, company executives told investors on a no-deal road show in London on Wednesday, said Ksenia Mishankina, a senior credit analyst at Union Bancaire Privee Ubp SA in London.

Read: Eskom has 18 months to get its house in order

Eskom wants the government to transfer the debt it has guaranteed onto its own balance sheet. At the end of the fiscal year in March, Eskom had utilised R295 billion of the guarantees offered by the government, according to the National Treasury.

The utility is hoping for resolutions to some of its problems and progress on a plan to split into three units after the National Treasury’s mid-term budget in October, the executives said, according to Mishankina. They also want the government to provide a resolution to the issue of unpaid debt from some of its municipal customers.

The R160 billion figure is derived from an assessment that it can sustain debt of five times earnings before interest, tax, depreciation and amortisation.

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