How Eskom plans to cut capital expenditure
The new CEO says the utility will need to reduce capital expenditure over the next three years to contain its gearing ratio to 72% of equity — but there will be no cutback on maintenance
Eskom is facing a spiralling debt load and annual interest bill that is already in excess of R45bn/year, coupled with a more assertive regulator that keeps fobbing off its requests for electricity tariff increases far above the inflation rate. It will now reduce its capital expenditure over the next few years in an attempt to contain costs and to become sustainable. The utility will not, however, curtail investment in its much-delayed and ballooning new capital assets of Medupi and Kusile power stations. Phakamani Hadebe, Eskom’s 11th CEO since 2007, says the utility needs to contain its gearing ratio to 72% of equity. "We need to reduce capital expenditure over the next three years. If we fail to do this the gearing ratio will jump to over 78% in three years’ time," says Hadebe.Eskom spends an average R70bn annually on infrastructure, which will be reduced to a minimum R45bn under its latest corporate plan. The bulk of the expenditure goes to building its newest power stations — th...
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