Page 5 - AfrElec Week 49

AfrElec COMMENTARY AfrElec
drivers of the country’s economy.
Eskom remains the provider of 90% of the
country’s electricity, despite the success in recent years of the government’s independent power producer (IPP) programme that has brought much renewables capacity online.
Power cuts mean that industrial output at key mining and industrial enterprises has fallen this week, with major miners such as AngloGold Ashanti, Sibanye-Stillwater and Harmony Gold all curtailing activity.
Reform plans
Eskom is Africa’s worst economic and invest- ment risk. At the end of November, it said in its interim results that it would lose ZAR20bn ($1.4bn) this year.
With its ZAR450bn rand ($30bn) debt, Eskom is set to receive ZAR100bn ($6.7bn) from the government over the next two years to meet operational expenses, as well as well as a ZAR230bn ($15.7bn) injection spread over the next decade.
The government has published some reform plans for the company. Its roadmap, published in October, calls for the break-up of the com- pany and the loss of its generating monopoly to cheaper IPPs.
The government intends to break off trans- mission by the end of March 2020 and to com- plete the creation of three new units under an umbrella holding company in 2022.
However, Finance Minister Tito Mboweni said in his November budget statement that the restructuring plan must be implemented before the government could consider the hard details of a long-term debt relief plan.
S&P Global Ratings described these plans as
“somewhat optimistic,” and that “the govern- ment’s lack of interests in dealing with the debt issues risks unintentionally triggering a default by Eskom or by the government itself.”
Bleak outlook
With Ramaphosa hinting at sabotage, and major industrial players reining in production because of power problems, the outlook for Eskom and indeed South Africa is bleak.
Eskom has said that this week’s load-shed- ding could cost the company ZAR27bn ($1.8bn), according to Ted Blom at South Africa’s Energy Expert Coalition (EECO).
Meanwhile, Eskom’s efforts to push up tariffs in a bid to increase revenues has been unpopular and has been challenged by the National Energy Regulator (Nersa).
By December 12, Eskom said it still had 2,000 MW of supply offline, while breakdowns at power stations amounted to over 9,500 MW.
One ray of light was the appointment of new CEO Andre de Ruyter, although press reports suggested that he got the job after up to 19 peo- ple had declined.
Described as technocrat that could push for- ward reform, de Ruyter may be drinking from a poisoned chalice.
Nevertheless, Ramaphosa warned on December 12 that if the supply crisis continued then it could create a “catastrophic situation” and push the country into recession.
Yet for Eskom the underlying need for reform and debt relief is becoming more desperate, as people face higher tariffs, industry faces unre- liable power supplies and the country’s power infrastructure continues to suffer from poor maintenance. ™
Eskom has said that this week’s load shedding could cost the company ZAR27bn ($1.8bn)
Week 49 12•December•2019 w w w . N E W S B A S E . c o m
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