Johannesburg, 16 July 2015 - Brian Molefe's stay at Eskom has been extended. The power utility's board wants him to continue at the beleaguered parastatal for another three months.
JOHANNESBURG – Eskom may have to approach banks for money to battle its financial crisis, energy analyst Chris Yelland said on Monday.
This after a report said the power giant was on the verge of insolvency and only had R1.2-billion liquidity in its reserves.
It squarely lays blame on poor governance for Eskom’s financial predicament, which is further compounded by an unsympathetic market.
“The first step Eskom says it has to do to maintain liquidity and not go into a negative is to cut back on capital expenditure, so we are talking about cutting back on R10-billion in expenditure at Medupi and other projects,” Yelland said.
The energy expert says Eskom will need some bridging finance and in the interim, would probably need to approach the banks until they can issue bonds, which would only be sometime in 2018.
“Government is the last resort and may need to be called on to provide a further injection and of course, government can borrow more - it&39;s just a question of at what price it can borrow and whether it&39;s prudent to borrow in these circumstances and whether it may not precipitate a credit downgrade, which in the end will cost South Africa more,” he added.
Scandal-hit Eskom has been under immense pressure of late.
Several executives, including the power utility’s former CEO Brian Molefe, ex-acting boss Matshela Koko and suspended chief financial officer Anoj Singh, are all being investigated for their role in alleged state capture.
The company has also been caught lying publically.
At the same time, Parliament heard shocking revelations of how Eskom was fleeced with the assistance of key executives in order to facilitate the controversial Gupta family.
This was heard during an inquiry into the troubled state-owned enterprise.