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- Eskom presented its annual report to lawmakers on Wednesday.
- Its debt has been increasing over the years and has now reached almost R500 billion.
- The National Treasury guarantees about R330 billion of the debt.
Eskom faced tough questions from lawmakers on Wednesday when it presented its annual report to parliament’s portfolio committee on public companies on Wednesday. Eskom owes some 488 billion rand, largely guaranteed by the state, which threatens the fiscus.
Eskom’s debt problem, which has been increasing over the years, went from R440 billion in the last financial year. It has been a major source of concern in various sectors, including international rating agencies, as the government continued to invest funds in the entity.
In 2020, R49 billion support was extended to Eskom, with R56 billion committed for 2021. The funds are primarily for debt service.
Eskom’s CFO, CFO Calib Cassim, told lawmakers that Eskom’s creditors were a mix of domestic and foreign lenders, including bonds, development finance institutions and export credit agencies.
“Some R330 billion of the R488 billion is already guaranteed by the National Treasury,” Cassim said, adding that Eskom, over the course of fiscal 2021, will repay R25 billion of the guaranteed debt.
“Once you pay the 25 billion rand, that amount will be available to Eskom again.”
More secured debt?
In addition, he stated that the payment of the guaranteed debt would allow the company, with the support of the shareholder and the National Treasury, to re-enter the market and increase the guaranteed debt, if necessary.
Eskom posted a net loss of R20.5 billion in the full financial year 2020, and Cassim said during the presentation of financial statements in October that the energy company expects to return to profitability from 2023, adding, however , that the current situation did. not provide a compelling case for that.
As part of stabilizing its finances, Eskom would seek to approach the Department of Public Companies and the National Treasury to extend its guarantee service, since each year there are maturities that expire and are payable.
“We would like to use that in the future until we restore balance and get to a position where Eskom is not reliant on government guarantees,” Cassim said.
He also raised the issue of electricity rates, saying that charging prices that do not cover the cost was not sustainable.
“What we are saying about rates is that the gap must be closed and Eskom has calculated that it is in the region of 25-30%, we are not saying that through the regulatory process there should be a one-time adjustment, it needs to be gradual taking into account the impact on the economy counts, “he said.
Eskom has submitted applications to the South African National Energy Regulator for Energy (Nersa) for additional rate increases, more than the 5.22% already approved for 2021/22.
