As the public rages against Eskom’s proposed tariff increases and President Cyril Ramaphosa takes cover behind yet another task team, the inevitable can no longer be postponed. Eskom needs a substantial bailout from the government and consumers need to pay higher tariffs. The only questions that remain are: how big and how high? That Eskom could fail is now a real prospect. Credit ratings agencies, the Treasury, the World Bank and credit analysts have warned for more than a year that Eskom is the country’s single largest risk. The power utility cannot service its debt and has been borrowing from one lender to pay another. The debt service cover ratio — the ratio of cash generated against what is needed to cover interest and debt repayments — has shrunk rapidly since September 2017, from 0.99 (close to where it needs to be) and is expected to be 0.52 when the financial year ends in March. Now, those credit lines are cut. With at least another R15bn needed by the end of March to pay d...

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