Carol Paton Editor at Large

A decision by the Treasury on how Eskom’s debt will be restructured can no longer be delayed as the utility struggles with liquidity problems and urgently needs a much bigger commitment of government support to persuade auditors that it will remain a going concern. Eskom, which is R440bn in debt and must still raise additional financing in 2019 to continue the construction of the Medupi and Kusile power stations, is unable to service its debt from its revenue and is in a classic debt trap, borrowing to finance interest payments. It also has about R45bn in debt redemptions that will fall due in the fourth quarter. The options on the table include a recommendation from President Cyril Ramaphosa’s task team for the creation of special-purpose vehicle, which will take over a large portion of the debt and raise concessional financing on the back of accelerated climate change commitments. Also under consideration is a transfer of debt, either partial or total, from Eskom to the national g...

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