Eskom needs debt relief, higher tariffs to survive: De Ruyter

Eskom needs debt relief in combination with tariff increases to survive, said CEO André de Ruyter, who has led the utility for three years as South Africa’s power outages have intensified.

The country has had 100 straight days of electricity cuts because of supply shortages largely caused by unreliable coal-fired power plants. Fixing the energy crisis that’s crimping the economy has become a central focus for President Cyril Ramaphosa’s government.

Financial constraints at Eskom, which has R396-billion of debt, combined with breakdowns, theft and sabotage at its plants, have caused the utility to impose blackouts for about 15 years.

The outages have progressively worsened in the past five months with Ramaphosa’s administration scrambling to find a way out of the crisis. The blackouts are costing South Africa’s economy as much as R899-million/day, according to the South African Reserve Bank.

“We need cost-reflective tariffs,” De Ruyter said. “If debt relief isn’t backed by tariff increases, we will be back to the national treasury with a begging bowl in five years.”  — Paul Burkhardt and Jennifer Zabasajja, (c) 2023 Bloomberg LP

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