Eskom CEO Phakamani Hadebe says the power utility is in talks with the government, trying to find a way to get more money to fight the current power crisis, as both its expected tariff hike and government bailout numbers fell short.<\/p>\n
Speaking to the SABC, Hadebe laid out Eskom’s financial woes in simple terms.<\/p>\n
He said that Eskom generates about R180 billion in revenue in a year, while operation costs amount to R140 billion – leaving R40 billion in net revenue.<\/p>\n
However, this is before debt and tax demands, which cost “R50 billion or so,” putting the group at a deficit. “We are borrowing money to service the debt,” Hadebe said.<\/p>\n
“That\u2019s why we are in discussions with government – because as long as we do not have the room to service the debt from our own operations, that debt will continue to be an issue.”<\/p>\n
Splitting Eskom is also not a quick fix, he said.<\/p>\n
Structurally, Hadebe said that Eskom has to reduce its costs, and is doing so through a reduction in both capex and opex, while targeting other reductions of R20 billion over the next three years.<\/p>\n
But the group’s problems have been exacerbated by the shortfall from the Nersa grant – which amounts to R150 billion over the next three years – as well as lower than expected government financing.<\/p>\n
According to the CEO, Eskom wanted approximately R100 billion from government, but was granted only R69 billion.<\/p>\n
“That\u2019s why we are in talks with government – because we aren\u2019t just dealing with income statements and operations, there are real balance sheet issues that need to be addressed,” he said.<\/p>\n
Hadebe said that, financially, Eskom could be self-sufficient within three to four years – if Eskom and the government can reach consensus on how to deal with these issues.<\/p>\n
Operationally, to resolve the issues with various power stations to bring all operations into a \u201cbetter position\u201d, the CEO said it would take 12 to 24 months.<\/p>\n