Tue, 28-Jun-2022
Friday 22 May 2020 , 6:15 am

Eskom CEO Sees Sustainable Future if $25 Billion Debt Pile can be Slashed

Eskom produces more than 90% of the electricity in Africa’s most industrialised economy but has battled to keep the lights on, a factor that helped push the country into recession even before the coronavirus crisis struck.
By SIN Bureau
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The chief executive of South Africa’s Eskom said on Thursday the state power utility could become financially viable and do without government bailouts if it could more than halve its debt to 200 billion rand ($11.2 billion).

Eskom Generation's pilot wind farm facility at Klipheuwel in the Western Cape, South Africa. (Source: Wikipedia)

Eskom has about 450 billion rand of debt and is mired in financial crisis as it does not generate enough earnings to meet its debt costs.

Its debt burden is equivalent to more than 8% of South Africa’s gross domestic product and includes roughly 150 billion rand in domestic bonds, 150 billion rand to development finance institutions such as the World Bank, 80 billion rand in foreign bonds. The rest is made up of export credit facilities and other types of loans.

Eskom produces more than 90% of the electricity in Africa’s most industrialised economy but has battled to keep the lights on, a factor that helped push the country into recession even before the coronavirus crisis struck.

Eskom’s problems are among the biggest challenges for President Cyril Ramaphosa, who has been trying to rebuild investor confidence after a decade of scandals and policy missteps under his predecessor, Jacob Zuma.

CEO Andre de Ruyter couldn’t say how long it would take to slash Eskom’s debt to 200 billion rand or achieve a 35% earnings before interest, taxes, depreciation and amortisation (EBITDA) margin, another metric it thinks will make its business sustainable.

He said the company would start a “renegotiation process” with independent power producers to try to lower electricity costs for consumers.

Power demand has fallen by an average of 6,000 megawatts because of the economic impact of the coronavirus, Chief Operating Officer Jan Oberholzer said.

Generation executive Bheki Nxumalo said the number of expected days of power cuts over the winter months had fallen to three from an earlier forecast of 31.

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Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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