PODCAST | Eskom will be back at Treasury’s door in 3-4 years without tariff reform, De Ruyter says

Former Eskom CEO Andre de Ruyter laid out challenges facing the newly appointed CEO of the ailing power utility, saying the state-owned company will be back at Treasury in three to four years for bailouts unless the tariffs matched the cost of electricity generation. 

The government has allocated R254bn to Eskom in the form of a debt relief package. The package tranche of funds comes with strict conditions, such as cutting costs, improving operational efficiency and reducing debt — already a tall order for incoming CEO Dan Marokane. 

Speaking to Business Day Spotlight, a podcast,  De Ruyter said the bailout was necessary, but not sufficient, to turn around the utility, which is saddled with R400bn-plus of debt and plagued by breakdowns at its ageing coal-fired plants.

He said he would have added one more condition to the debt relief package: that Eskom secures cost-reflective tariffs from the energy regulator Nersa, which has often granted Eskom less than what it has asked for.

“If we do not get them, Eskom doesn’t get cost-reflective tariffs, then in three to four years’ time, the entity will be back at Treasury’s door with a begging bowl, asking for more, because its costs will be higher than its revenues. You don’t need to be a business wizard to understand that,” he said.

Listen to the full conversation with Business Day editor Alexander Parker below: 

Business Day Spotlight is a TimesLIVE Production.