Eskom CEO Andre de Ruyter says there's still a long way to go to fix Eskom.
CAPE TOWN - Eskom urgently needs more cash to stabilise its ballooning debt pile with the funds coming from a rise in tariffs or new equity, new chief executive Andre de Ruyter told lawmakers on Tuesday.
Eskom's urgent application to the court for a tariff increase involved hiking rates by 16.6 percent from April 2020 and a further 16.7 percent from April 2021.
It said its proposed urgent rate hike followed an error by the regulator Nersa, which in 2019 set Eskom's tariff rises at 9.4 percent for 2019/20, 8.1 percent for 2020/21 and 5.2 percent for 2021/22.
"The issue of Eskom debt has to be addressed to make Eskom sustainable," De Ruyter told parliament's Standing Committee on Public Accounts.
The utility has debt of about R450-billion, mostly backed by the government, and is struggling to service the interest on its borrowing due to falling revenues. Its access to capital markets has also been constrained by years of mismanagement.
"The money is going to have to come from somewhere. Either it comes from a tariff increase or it comes from an equity injection. It (the debt) doesn't just disappear. In fact it creates a very significant risk to the sovereign," said De Ruyter.
In July, the government allocated Eskom R59-billion over two years to service its debt, on top of the 10-year, R230-billion injection it provided months before that.
The utility has been forced to impose several rounds of severe power cuts in the past year that have dragged economic growth lower and increased the risk of credit downgrades, especially from Moody's, the last agency that gives South Africa an investment grade rating.