Eskom lays bare its monumental challenges
When Eskom had 32 000 employees, debt of R40-billion and an output of 40 000 MW, it was a world beater, Eskom group CE Phakamani Hadebe said this month.
But its current employee level of 47 000 employees, debt of R440-billion and output of only 38 000 MW are presenting major turnaround challenges.
Hadebe told the Investing in African Mining Indaba that Eskom’s costs were excessive; its debt was being serviced from borrowings; and three South Africa banks, in addition to multilateral lenders, were against the funding of coal-based power generation.
Eskom’s expenditure on environmental protection was insufficient to satisfy the laid-down requirements and clean coal efforts were not yet adequate to open the way for coal-based expansion.
Shareholder capital assistance and tariff increases were now needed to bolster Eskom’s own cost-cutting efforts, which have included capital expenditure and operational expenditure reductions.
He identified the operational problems as being mainly due to maintenance not being undertaken at the correct level, new-build power stations contributing less than expected, power station ageing and coal stocks being below the required level.
Solutions being proposed include Eskom being recapitalised to the extent of R100-billion by its shareholder, the State, and Eskom’s power generation, power transmission and power distribution aspects being unbundled into three distinct business units.
President Cyril Ramaphosa established a task team in December to assess ways of addressing Eskom’s sustainability problems.
The task team presented a plan for splitting the utility into its component parts to the African National Congress’s January lekgotla and Ramaphosa is expected to make a pronouncement on the utility’s restructuring in the near future.
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