Eskom implemented load shedding on Thursday for the fifth day in a row as the state-owned utility struggled to keep its generators going. It may not feel like it, but load shedding is the least of our worries.
Even if Eskom manages to keep the lights on; the mountain of debt it accumulated in the past decade threatens to destroy the South African economy.
In 2008 Eskom had R40 billion in debt and sold more electricity than it does today, despite having far fewer employees and expenses. Today, Eskom owes R419 billion and earns an income that doesn’t even cover the interest on its debt.
Eskom borrowed R300 billion (and counting) to build Kusile and Medupi, two enormous and deeply flawed coal-fired power stations.
Do President Cyril Ramaphosa’s plans have any hope of saving Eskom and the country?
The Money Show’s Bruce Whitfield interviewed Dr Adrian Saville, CEO of Cannon Asset Managers and Professor at Gordon Institute of Business Science (Gibs).
This is about stitching and patching what for all intents and purposes is a very grand risk to the country. Eskom is troubled operationally, financially and it is also technologically out of pace. Almost all of our energy is coal-based. We are a decade off technologically.
Invariably two things happen with grand-scale infrastructure spend. The first is the number goes up and the second is the date goes out. Both of these very, very big projects spends – which was supposed to deal with the next decade of energy certainty – both of them are delivering at 50% of their designs.
South Africa has been given the benefit of doubt [by rating agency Moody’s] for an extremely long time. A downgrade is going to make Eskom’s problem even bigger. Eskom would be looking for funding at higher rates. It really is worrying.
