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Eskom sizes up its debts
SOUTH AFRICA
ESKOM’S chief restructuring o cer is to take weeks not months to establish whether the South African government’s o er to take over ZAR250bn ($16.4bn) of the company’s debt is workable. Freeman Nomvalo, a former Treasury o cial, is to examine the “pros and cons” of debt restructuring, South African Public Enterprises Minister Pravin Gordhan said this week.
e current Eskom board itself will draw up plans to unbundle the company into generation, transmission and supply, a process which is anticipated to take months.
Gordhan also said that Eskom was taking measures, such as hiring 200 new technical sta , to stabilise generation, build resilience at power stations and avoid any more power cuts.
The figure of ZAR250bn ($16.4bn) comes a er Eskom itself said last week it wanted the government to take over a slightly higher gure of ZAR290bn ($19bn), leaving it with a total of ZAR150bn ($9.8bn), which the company main- tained was manageable.
Eskom told bondholders in London that it wanted the South African government to take on the majority of its ZAR440bn ($29bn) debt in a bid to rescue the company’s nances. Exec- utives told investors last that it could manage to service ZAR150bn ($9.8bn) of debt but no more, Bloomberg reported.
Eskom’s debt is currently guaranteed by the government, but it is still held on the company’s balance sheet. e utility wants to transfer the debt to the state’s co ers in order to give it some nancial breathing space and to reduce its debt liabilities.
At the end of the its fiscal year in March, Eskom has already drawn down a total of ZAR295bn ($19.3bn) in government guarantees, gures from the National Treasury say.
e government recently released another ZAR128bn ($8.4bn) over three years to Eskom in a bid to shore up the company.
Eskom announced earlier in August that it made a record loss in the 2018-19 scal year of ZAR20.7bn ($1.4bn).
Eskom was in London to holds talks with its bondholders, many of whom have invested to take advantage of the sovereign guarantee o ered by Pretoria.
“We are having business update discussions with investors,” Dikatso Mothae, a spokeswoman for Eskom, said, Bloomberg reported.
e government’s current reform plans for Eskom currently rest on splitting the company up into generation, transmission and supply units in order to increase nancial transparency. e government aims to announce more details of its plans when the National Treasury presents its mid-term budget in October.
Eskom has problems on all fronts, from unpaid bills, especially by municipal govern- ments, to power cuts, fuel supply problems, cor- ruptions and strike threats.
Moody’s Investors Service warned that Eskom now needed a rescue package in order to turn its business around and improve its opera- tional and nancial performance.
It also warned that Eskom required “signi - cant external support,” if any turnaround was to have any chance of success.™
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w w w . N E W S B A S E . c o m Week 32 14•August•2019