Eskom pleads for aid to escape ‘debt trap’
An immediate financial crisis looms as banks stop lending
Eskom CEO Phakamani Hadebe on Monday made a desperate plea for three years of substantial tariff hikes and a massive government bailout, which he said was necessary to pull the power utility back from the debt cliff and avert disaster. Hadebe was addressing hearings held by the National Energy Regulator of SA (Nersa) to query Eskom’s application for a 15% tariff increase beginning in 2019/2020, which would result in a total increase of 52% over the three-year period, significantly above the Reserve Bank’s inflation target of 3%-6%. It also emerged during the hearings that Eskom is unable to raise further funding from the financial markets unless it secures significant government support in the form of a capital injection or debt relief. It must raise R20bn by the end of March to fund operations or run out of money to pay suppliers for inputs such as coal and employee salaries. The company has R419bn in debt — projected to rise to R600bn as Eskom continues its build programme — and i...
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