Godongwana says Eskom’s debt plan remains on track despite De Ruyter’s imminent departure

According to Enoch Godongwana, the impending departure of André de Ruyter does not change the government’s commitment to assume part of Eskom’s debt.

  • According to Enoch Godongwana, the impending departure of André de Ruyter does not change the government’s commitment to assume part of Eskom’s debt.
  • The government announced in October that it would assume between one and two-thirds of Eskom’s debt.
  • Godongwana will provide more details in the February budget.
  • For more stories see News24 Business front page.

Finance Minister Enoch Godongwana said plans for the government to assume part of the debt of the troubled state-owned utility remain on track and the pending resignation of its CEO, André de Ruyter, has not affected negotiations with bondholders.

Eskom, which supplies more than 90% of the country’s electricity, owes around R400 billion but isn’t generating enough revenue to cover its operating costs and interest payments. The utility has subjected the country to constant blackouts since 2008 because its old and poorly maintained facilities can’t generate enough electricity to meet demand. The company announced this week that De Ruyter will leave his post at the end of March.

Most of Eskom’s debt “is guaranteed by the state,” Godongwana said in a speech to business leaders on the sidelines of a ruling parties’ conference in Johannesburg on Saturday. “Well, if I don’t do something about it, Eskom will drag me down with them. I’m between a rock and a hard place. We have to take on this debt.”

The government first announced in October that it would assume between a third and two-thirds of the debt, with details to be announced in the February budget.

“I was told the budget was on February 22,” Godongwana said. “The market expectation in October was that I would be explicit. So I can’t dally any further; I have to be explicit that day.”

The extent of the relief will depend in part on tariff increases Eskom receives from the national energy regulator. According to the chief financial officer, price increases must both be palatable to consumers and ensure the benefits are sustainable.

“I don’t want Eskom coming back to me in the future after I’ve paid off this debt,” he said.

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Other highlights:

  • “Without fear of contradiction, I would like to say that we dropped the ball because we focused on fixing Eskom instead of bringing power to the grid. There is a difference between these two. What is required is a focus on both.”
  • “Between 2019 and to date we have invested R230 billion in Eskom. I don’t know what people mean when they say it takes money. They charge people, they generate revenue. So what is needed?”
  • “I’m not sure if Eskom is the right vehicle for this, but we need new capacity. I don’t care who is providing this new capacity; whether it’s someone from Mars doesn’t matter. What I want is electricity in the grid.” .”

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