South African Finance Minister Enoch Godongwana said plans for the government to take over part of the troubled state power utility\u2019s debt remain on track, and the pending departure of its chief executive officer hasn\u2019t affected negotiations with bondholders.<\/p>\n
Eskom, which supplies more than 90% of the country\u2019s power, owes about R400 billion but isn\u2019t generating enough income to cover its operating costs and interest payments. The utility has subjected the country to rolling blackouts since 2008, because its old and poorly maintained plants can\u2019t generate enough electricity to meet demand.<\/p>\n
The company announced this week that CEO Andre de Ruyter will leave his post at the end of March.<\/p>\n
The bulk of Eskom debt \u201cis guaranteed by the sovereign,\u201d Godongwana said in a speech to business executives on the sidelines of a governing-party conference in Johannesburg on Saturday. \u201cSo if I don\u2019t do anything about it, Eskom will drag me down with them. I am between a rock and a hard place. We have got to take that debt.\u201d<\/p>\n
The government first announced in October that it will take on between one-third and two-thirds of the debt, with details to be announced in the February budget.<\/p>\n
\u201cI am told the budget is on 22 February,\u201d Godongwana said. \u201cMarket expectation in October was that I was going to be explicit. So I can\u2019t continue to dilly dally, I must be explicit on that day.\u201d<\/p>\n
The quantum of relief will in part depend on the tariff increases Eskom secures from the nation\u2019s energy regulator. Price rises will need to be both palatable to consumers and ensure the utility becomes sustainable, according to the finance chief.<\/p>\n
\u201cI don\u2019t want an Eskom that will come back to me in the future, after settling that debt,\u201d he said.<\/p>\n
Other highlights:<\/p>\n
Eskom is in discussions with the Treasury\u2019s asset and liability team about securing additional funds to buy more diesel to run its generators, but a number hasn\u2019t been discussed so far.<\/p>\n