The embattled South African state power utility’s debt burden, described by Goldman Sachs Group Inc as the biggest threat to the nation’s economy, has burgeoned, compounding the difficulty the government faces in formulating a turnaround plan.
Eskom Holdings’ debt is approaching 500 billion rand (Dh128 billion or $35 billion), according to data compiled by Bloomberg from public records, including bonds and issued loans, up from about 370 billion rand a year ago.
While the utility declined to comment on the current number, its chief executive officer, Phakamani Hadebe, last month put total debt at about 450 billion rand.
Eskom hasn’t been selling enough power to cover its operating costs and interest payments, and has been forced to implement rotating blackouts over the past few years to prevent a collapse of the national grid as its fleet of ageing and poorly maintained plants struggled to keep pace with demand.
President Cyril Ramaphosa announced plans earlier this year to split the company into three units to make it easier to manage, and the National Treasury allocated a 69 billion-rand cash injection over the next three years in the February budget — a bailout that’s already been partly offset by the rising debt.
The composition of the utility’s debt has also changed, with loans accounting for just more than half of its total burden, up from 40 per cent a year ago. The switch to short-term financing hasn’t been smooth sailing — a loan agreed with China Development Bank failed to come through as scheduled earlier this year and Eskom had to take out an urgent 3 billion rand bridge loan from Absa Group Ltd. to avoid a call on existing guarantees.
Source: Gulf News