Eskom will not need to borrow any more money for its operational needs and capital requirements for the next five years because of the government’s debt relief package and the tariffs approved by the National Energy Regulator of SA (Nersa), Eskom acting CEO Calib Cassim said on Tuesday.
Nersa has approved an 18.65% tariff increase for 2023/24 and 12.74% for 2024/25.
Cassim said the debt relief encapsulated in the Eskom Debt Relief Bill would save Eskom from having to go to the markets. However, he highlighted the ongoing and mounting problem of municipal debt. which now stands at over R58bn and is expected to reach R66bn-R68bn by the end of March 2024, interim CFO Martin Buys said.
Cassim and Buys together with Eskom chair Mpho Makwana and other Eskom executives gave their response to the bill in an engagement with parliament’s standing committee on appropriations. Public enterprises minister Pravin Gordhan also participated in the discussion.
In terms of the R254bn debt relief, the Treasury will cover all debt-servicing costs over the next three years. This will free up cash so that Eskom can undertake immediate and much-needed maintenance and investment to reduce load-shedding. The relief includes R184bn in cash funding over the next three years and thereafter government’s take over of up to R70bn of Eskom debt if it meets the conditions attached to the relief.
Buys explained that in the past the net cash generated from Eskom’s operations was not sufficient to pay off debt so it had to borrow more to do this. The debt relief package meant that Eskom could use its cash resources for capital investment.
He estimated that in the current financial year there would be about R35bn-R40bn available for capital investment, and by the end of the five-year period this would have grown to about R55bn.
Makwana said that a committee of the Eskom board was finalising interviews for the board for the independent transmission company. He hoped that the company with its board would be operating by the third quarter of this calendar year.
A search is also under way for a new CEO to replace Andre de Ruyter. Makwana said there was quite a strong shortlist and the board was ready to conduct interviews.
Newly appointed head of generation Bheki Nxumalo said that having the debt relief would allow Eskom to plan its capital expenditure well in advance. The inability to do so in the past had been a big problem.
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