Picture: REUTERS
Picture: REUTERS

The government is pushing Eskom, which is R419bn in debt, to present a credible turnaround strategy before the February 20 budget presentation, a person familiar with the situation said.

While the state-owned enterprise (SOE) has asked the national energy regulator for permission to raise power prices by 15% a year for three years, that amount would still leave the utility needing R100bn, the person said. The turnaround plan, initially scheduled for September, has been repeatedly delayed by management, and President Cyril Ramaphosa has appointed an independent panel to come up with solutions for the company.

“That task-team is working vigorously to ensure it comes up with proposals,” Ramaphosa told reporters in Johannesburg on Wednesday. “Eskom has huge funding challenges.”

Eskom is seen as critical to SA’s creditworthiness with two major credit ratings companies assessing the country’s debt as junk. A third, Moody’s Investors Service, still rates the country as investment grade.

President Cyril Ramaphosa’s Eskom task-team is under pressure to deliver. Picture: GCIS
President Cyril Ramaphosa’s Eskom task-team is under pressure to deliver. Picture: GCIS

On December 14, Ramaphosa  appointed a panel to advise the government on how to resolve the producer’s operational, structural and financial challenges. The president met with the Eskom task-team and public enterprises minister Pravin Gordhan on Tuesday.

“The strategy is currently being discussed at shareholder level,” Eskom spokesperson, Dikatso Mothae, said in a reference to the government, which owns all of Eskom. “Once that process has been concluded it will be shared with the public.”

Bloomberg