New management takes charge of Eskom crisis
New board warns that a drop in sales volumes and low electricity tariffs threaten the power utility’s survival
Eskom’s new management team delivered an unpalatable message this week: the power utility cannot stay afloat without restructuring its cost base and balance sheet, and without a bigger electricity tariff increase. "It is not that we think the tariff is the panacea," chairman Jabu Mabuza said at Tuesday’s results presentation. "It is part of the problem that Eskom relies on tariffs and borrowings. It needs to produce electricity in a cost-effective way so it can defend its pricing." Interim group CEO Phakamani Hadebe says Eskom will approach other state-owned entities with the capacity to take equity stakes in the electricity producer to address its liquidity shortfall, as that cannot only be resolved through borrowings and government guarantees. He names the Public Investment Corp, with R2 trillion in assets, the Industrial Development Corp and the Development Bank of Southern Africa, which already has a R15bn exposure in Eskom’s debt. The idea is that these entities, which fall ind...
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