Billions more in government funding is the only option left for Eskom

Eskom chairperson Jabu Mabuza says that the power utility has run out of its borrowing abilities and that it’s only short-term option is to turn to government for support.

Presenting to parliament on Tuesday (10 September), Mabuza said that Eskom was still not generating enough revenue to service its debt and cover expenses.

“We are not generating the revenue. We are left with one other option which is shareholder support. We will not be able, with cost savings alone, to solve Eskom’s financial health,” he said.

“On the cash flow side, cash as I have indicated is not sufficient. The cash we generate from our operations is a negative of R36 billion.

“We generate R33 billion and we need R69 billion to service our debt. That gives us a negative of R36 billion before we go borrowing. This R58 billion that we see is money we raised from borrowing in the past year.”

Mabuza said the current situation at Eskom was unsustainable and that the power utility was in a situation where it has to borrow money to service debt.

He added that Eskom’s main focus at the moment is to ensure that there is no load-shedding due to its impact on the economy and customers.

The power utility has gone 157 days without load-shedding.

Government funding

To ensure Eskom is able to meet its financial obligations, finance minister Tito Mboweni announced an Eskom support package of R23 billion for the next three years during his budget speech in February.

Mboweni also tabled the Special Appropriation Bill to provide Eskom additional support of R59 billion in June.

The additional support (R23 billion over three years add to 2019/20: R26 billion and 2020/21: R33 billion) means that Eskom will receive R128 billion over the next three years.

Read: Moody’s says fixing Eskom will take time

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Billions more in government funding is the only option left for Eskom