President Cyril Ramaphosa said that the state-owned power utility’s financial position “remains untenable” and urged nonpaying citizens to change a culture of nonpayment and settle the “huge amounts” owned to the cash-strapped producer.
Eskom, which supplies about 95% of the country’s power and is seen as the biggest risk to the economy, has R450bn of debt and is surviving on state bailouts after huge cost overruns at two partially completed coal-fired power plants. Citizens endured four days of load-shedding last week to prevent the total collapse of the grid.
Power shortages and policy uncertainty have damped economic growth and plunged business confidence to multi-decade lows.
“The sheer scale of Eskom’s debt is daunting,” Ramaphosa said in a statement Monday. “Further bailouts are putting pressure on an already constrained fiscus.”
SA will “soon” announce the appointment of a permanent CEO for the utility and “shortly” release a special paper on the path the CEO and a strengthened board should take, he said.
Eskom is owed R23.5bn by defaulting municipalities, a figure that keeps increasing, and “huge amounts” of money by individual users, Ramaphosa said. By the end of March, Soweto owed R18bn alone, Eskom said in July.
“This is the time for a frank discussion on the payment of owed money to Eskom by individual users,” he said. “Boycotting payment for services had a place in apartheid SA. It was an effective tool to mobilise communities against an unjust system. But it has no place in present-day SA. If public utilities like Eskom are to survive, then all users need to pay for the services they receive.”
Last week, the government published its latest Integrated Resource Plan (IRP), which maps out the energy mix for the next decade. It includes a switch to more green energy as the country, which sources most of its electricity from coal, faces pressure to meet emissions-reduction targets.
SA will develop a framework to take ageing coal-fired plants out of service, Ramaphosa said. While this will present challenges for communities and workers where fossil fuel-powered energy generation takes place, “it also presents opportunities for those affected to have access to technologies that are more cost-effective and better for human health”.
Bloomberg
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