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Covid-19 delays efforts to address Eskom's debt crisis

The utility would have to achieve a debt balance of R200-billion for it to be financially sustainable and not require assistance from government

The power utility, which has been described as the lifeblood of South Africa’s economy, produces 90% of the country’s electricity and has made progress in meeting some of the early targets related to its separation into three separate entities (generation, distribution and transmission).

Eskom CEO André de Ruyter said in a separate briefing last month that the utility would have to achieve a debt balance of R200-billion for it to be financially sustainable and not require assistance from government.

Prior to the lockdown, government was in advanced discussions with business and labour social partners in the National Economic Development and Labour Council (Nedlac) about the feasibility of using money from the Public Investment Corp (PIC) and two development banks to relieve Eskom of R250-billion of its debt through a special purpose vehicle.

Eskom CEO Andre de Ruyter

Last year Gordhan appointed the chief executive of the South African Institute of Chartered Accountants (Saica), Freeman Nomvalo, as Eskom’s chief restructuring officer to interrogate the utility’s debt burden and collate proposals on how to deal with it.

Speaking on Eskom’s restructuring, De Ruyter again emphasised that the entity is “not moving slowly” by opting for a divisionalisation or corporate reorganisation strategy as opposed to a full legal separation as initially proposed by the department of public enterprises in its restructuring road map.

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