Page 5 - AfrElec Week 44

AfrElec COMMENTARY AfrElec
ZAR450bn ($30.5bn) debt under control. Minister of Public Enterprises Pravin Gord- han’s new roadmap for Eskom, released at the end of October, outlined these plans, but did not detail funding or how to tackle the vexed question of decommissioning coal-fired power
plants.
Moody’s said in its report that the roadmap
could bring modest financial benefits for the company over the medium term but failed to address pressing, immediate issues.
“Important questions, including how the rights of existing creditors will be respected as Eskom is reorganised, remain unanswered,” the ratings agency said.
“This makes any turnaround of the compa- ny’s operations very difficult without a clear steer andsupportfromthegovernment.”
Meanwhile, the government’s new Integrated Resource Plan (IRP), released in mid-October, maintains a commitment to new coal plants, 1,500 MW of them. It also maintains, but does not extend, the commitment to 3,000 MW of gas capacity.
It calls for 23,854 MW of new renewables by 2030, such as 1,600 MW per year of wind from 2022 until 2030. The plan requires wind and solar to account for 25.6% of the energy mix in
2030, up from the present 7.2%.
Most urgently for preventing Eskom from
going bust, Finance Minister Tito Mboweni in his budget statement at the end of October failed to outline any details of how the government would shoulder some of Eskom’s debt.
Eskom has already said it could handle up to ZAR200bn ($13.5bn) of debt, but this leaves doubts about the rest.
Mboweni said in his budget statement that the restructuring plan must be implemented before the government could consider debt relief.
Looking ahead
The future for Eskom is bleak on many fronts. It needs urgent debt relief so it can divert cash from servicingloanstoshoringupitsinfrastructure. It also needs clear government policy, which is not forthcoming.
The government also needs to make a clearer commitment to renewables and to meeting the country’s climate change goals.
By including coal in the IRP at a time when many institutional investors and development finance institutions (DFIs) are existing from coal means that the government is cutting off many sources of funding. ™
Week 44 06•November•2019 w w w . N E W S B A S E . c o m P5