Selling of assets on the cards for debt-ridden Eskom
Johannesburg - Unbuilding the battling Eskom and selling its core assets to steer off bankruptcy may be on the cards for the state utility.
Plans to privatise the power utility emerged after senior executives met this week at a closed executive forum, “Eskom cannot save itself”.
High-ranking officials who spoke to Independent Media on condition of anonymity alluded to major drivers that would result in unbundling Eskom which is running at a loss without revenue to meet its escalating costs.
This week, Eskom confirmed that it was working on a new corporate plan that will assess “if any assets will be sold”.
The state-owned entity (SOE) is R390billion in debt.
“Interest plus capital is making it too expensive” to service its debt, said an official.
The rate at which the independent power producers (IPPs) were being brought on board put a significant strain on the utility’s revenue stream.
In addition, Eskom is not able to generate earnings before interest tax, depreciation and amortisation of 35% to pay back its debt.
It continues with the IPPs and has frozen expenditure on business and stopped spending on maintenance.
Executive sources within the entity confirmed that the IPPs were costing the power utility close to R90million a day.
These costs will be passed on to consumers as the National Energy Regulator of South Africa has given Eskom the nod to hike tariffs in April next year, raising prices by as much as 10 to 20%.
Eskom national spokesperson Khulu Phasiwe confirmed a new corporate plan would provide guidance on the structure of Eskom and its role in the renewable energy space.
He explained that the new corporate plan would address issues such as the utility’s staff complement and “if any assets will be sold”.
“It’s important to note that staff reductions have not been raised in all the engagements that Eskom had with the trade unions.
The Sunday Independent