File: Eskom is denying allegations that it's not being honest about load-shedding.
JOHANNESBURG - Eskom is keeping mum on details of their reported request to government, to take R100-billion of its debt.
The struggling power utility wants this amount, to go on government’s balance sheet, as part of its turnaround strategy.
If granted, the country’s debt to GDP ratio could worsen, with a further possibility of a credit rating downgrade.
Eskom’s R350-billion government guarantee is already a risk to the fiscus.
Now the power utility reportedly wants government to shoulder R100-billion of its debt.
With a massive R420-billion debt amassed over a decade,
Eskom is struggling to pay interest costs from revenue earned.
Spokesperson Khulu Phasiwe would only say the utility is discussing a strategic review with the government.
“Once that review has been completed and the contents have been shared with all the key stakeholders including National Treasury, including the president and also the Department of Energy and other relevant stakeholders, then we will know as to what intervention, if any, government will be coming up with”, Khulu Phasiwe, Eskom spokesperson.
Some experts warn that this request to government could be catastrophic.
“Roughly speaking, it’ll add another R20-billion a year onto government’s expenditure pattern. And we already know that the government debt levels are very high and their deficit is very high. So the problem is the government can’t afford this and should they do it, the country will be classified as junk status by all the credit rating agencies simply because the debt levels will be too high”, said Wayne Mccurrie of FNB wealth and investments.
According to McCurrie, consumers could end up footing the bill.
READ: Eskom still hamstrung
“You will have to see higher taxes because the government will have to find this money from somewhere. With government deficit now, the difference between what they earn and what they spend is about a negative four percent of GDP and it can’t really go much higher, so they will have to tax more”, said Mccurrie.
Eskom bosses are currently on an investor roadshow in the UK and US, to try and raise the R72-billion they need, for the current financial year.
So far they’ve already managed to raise around R52-billion.