After many years of unsuccessful searching, Eskom has finally found a buyer for its housing mortgage subsidiary.
The sale of the Eskom Finance Company, which has an estimated loan book of R9bn, was one of the conditions imposed by the National Treasury for the electricity utility to qualify for its R254bn debt relief package. Its failure to execute this led to a R4bn cut in the relief.
The company provides home loans to Eskom employees.
Eskom chair Mteto Nyati told parliament’s energy and electricity committee on Wednesday that the Eskom board had approved the sale about a month ago, with CEO Dan Morakane adding that the deal was expected to be finalised by the end of the financial year at end-March.
Nyati would not reveal the sale price or the identity of the buyer, but said the outcome was slightly better than Eskom had expected. He added that the deal would have to get the go-ahead from the Competition Commission. Nyati said Eskom had been trying to sell the entity for about 20 years.
Finalisation of the sale would mean that Eskom had complied with all of the Treasury’s conditions for the relief package provided for in the 2023 Eskom Debt Relief Act.
Nyati told MPs that the Eskom board appointed in October 2022 had achieved most of its top five priorities, namely to turnaround generation capacity — the energy availability factor is now 63% compared to 54% earlier this year and there has been no load-shedding for about eight months — strengthen the balance sheet, unbundle the utility, strengthen the leadership team and address fraud and corruption.
Eskom group CEO Dan Marokane noted that the financial and operational performance of Eskom had improved due to last year’s tariff increases and the end of load-shedding, which meant the sale of more electricity, and R16.3bn less expenditure on diesel to keep the open-cycle gas turbines running.
“Eskom is turning the corner in terms of its operational and financial performance, although there is still further work required to ensure the sustainability of the industry,” he told the committee’s MPs.
He also addressed the delay in submitting Eskom’s financial results for 2023/24, which had led to warnings by the JSE that the listing of Eskom bonds would be suspended.
Marokane said that audit issues, particularly about revenue, were the cause and had been addressed. The results, as well as the results for the first six months of the current financial year, should be released by December 20.
Marokane said an engagement would be held this week with the JSE.
Municipal debt to Eskom, which now totals R93bn and is growing by more than R10bn a year, remains a burden and could reach over R120bn by end-March.
Marokane pointed out that the Treasury’s municipal debt programme was not working — of the 71 municipalities that signed up for the programme, only 11 were honouring the timely payment of their current accounts.
Municipal debt, he said, was “spiralling out of control”, putting Eskom’s finances at risk and pressure on tariff increases and on the debt reduction required by the Treasury. A political solution was urgently required.
There could be no unbundling of Eskom’s distribution business until the municipal debt problem had been solved because lenders would be concerned about the viability of the business.
Group executive for generation Bheki Nxumalo said 2,504MW would be brought online by the end of the current financial year through the return of unit four of Medupi (794MW) and unit two of Koeberg (930MW) and the synchronisation of Kusile unit six (800MW).
A March 2025 target of 70% had been set for the energy availability factor, now at 63%. Kusile and Medupi were performing “extremely well” at expected levels, Nxumalo noted.
National Transmission Company SA (NTCSA) interim CEO Segomoco Scheppers said the company’s corporate plan made provision for R112bn (under revision) in investment in transmission infrastructure for the first five years of the transmission development plan until 2029.
“Delivery will be dependent on revenue/tariff application through Nersa (National Energy Regulator of SA) (and) the mobilisation of capital, contractors, suppliers and skilled workers and professionals,” he said.
The targets for the period 2025-2029 were for 5,044km of transmission lines (of the 14,494km the country needs), 14 reactors, 87 transformers and 15 capacitors, followed in the 2030-2034 period by 9,450km of transmission lines, 45 reactors, 123 transformers and 25 capacitors.
Scheppers said there were 15 projects for 1,700km of transmission lines ready for execution or already under execution and 29 projects for 3,300km under various stages of development.
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