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AfrElec ESKOM AfrElec
Eskom could need more funding
than forecast amidst power crisis
SOUTH AFRICA
ESKOM, South Africa’s electricity utility, could increasingly relied on to generate power due
need to raise more capital than initially forecast to frequent faults at its ageing coal-fired plants,
due to rising diesel prices, workers’ strikes and a has also risen substantially this year in line with
low tariff, Reuters reports, citing a ratings agency international crude prices.
report. The utility generated 20% more power from
The company has, in recent months, been diesel-powered turbines between April and July
failing to dispatch enough electricity, leading this year compared to the same period last year,
to prolonged blackouts, or load shedding as it is according to Eskom data.
known in the country. In early July, it awarded Eskom will need to raise more capital to meet
its workers a 7% wage increase after a prolonged its debt maturities, interest payments and other
strike that disrupted electricity supply. Eskom cash flow shortfalls, S&P Global said.
was awarded a 9.6% tariff increase, far lower than When it agreed to the salary hike, the com-
the 20.5% it had expected. pany acknowledged that the award was unaf-
As a result of these factors, which boosted fordable as it added $59mn to the wage bill.
costs but trimmed revenues, the news agency Meanwhile, Eskom announced on July 22
reports, citing an S&P Global bulletin for July that it had suspended load shedding (rolling
19, Eskom’s funding requirements for its finan- blackouts) as its network had recovered enough
cial year to March 2023 could now be as much as to allow for uninterrupted supply. That is despite
$2.7bn, higher than $1.8bn. the fact that it had 3,693MW on planned mainte-
“Not only did South African energy regulator nance and 14.261MW unavailable due to break-
(NERSA) award a lower-than-anticipated tariff, downs out of its 45,000MW capacity.
the company also suffered strike action...that “Eskom is pleased to announce that load
disrupted its power generation, and (faces) high- shedding will be implemented at [the lowest
er-than-forecast diesel costs,” S&P Global said. stage] at 16:00 – 24:00 this evening. Load shed-
S&P Global has assigned Eskom a ‘CCC+’ ding will then be suspended as the generation
rating with a ‘negative’ outlook. Eskom is already system has recovered sufficiently at this point.
is saddled with a debt of $24bn which, reports Eskom thanks the public and all stakeholders
say, it cannot pay. for their patience and understanding during this
The cost of diesel, which Eskom has difficult period of load shedding.
Week 30 28•July•2022 www. NEWSBASE .com P7
