Godongwana says Eskom’s debt plan remains on track, despite De Ruyter’s pending exit

Enoch Godongwana says André de Ruyter’s pending departure will not change the government’s commitment to take over part of Eskom’s debt.

  • Enoch Godongwana says André de Ruyter’s pending departure will not change the government’s commitment to take over part of Eskom’s debt.
  • The government announced in October that it would assume between one and two-thirds of Eskom’s debt.
  • Godongwana will announce more details in the February budget.
  • For more stories, go to News24 company front page.

Finance Minister Enoch Godongwana said plans for the government to take over some of the debt of the troubled state power utility remain on track and that the pending departure of its chief executive, André de Ruyter, has not affected the negotiations with the bonds.

Eskom, which supplies more than 90% of the country’s electricity, owes about R400 billion but is not generating enough revenue to cover its operating costs and interest payments. The utility has subjected the country to blackouts since 2008 because its old and poorly maintained plants cannot generate enough electricity to meet demand. The company announced this week that De Ruyter will step down at the end of March.

Most of Eskom’s debt “is guaranteed by the sovereign”, Godongwana said in a speech to business executives on the sidelines of a ruling party conference in Johannesburg on Saturday. “So if I don’t do anything about it, Eskom will drag me down with them. I’m between a rock and a hard place. We have to take on this debt.”

The government first announced in October that it will assume between one-third and two-thirds of the debt, with details to be announced in February’s budget.

“I am told the budget is on February 22,” Godongwana said. “The market expectation in October was that it was going to be explicit. So, I can’t continue to dissolve; I have to be explicit on that day.”

The amount of relief will depend, in part, on the tariff increases that Eskom secures from the country’s energy regulator. According to the finance chief, price increases will have to be acceptable to consumers and ensure that the utility is sustainable.

“I don’t want an Eskom that will come back to me in the future, after we settle this debt,” he said.

READ ALSO | Godongwana: I’m not panicking about the ANC leadership race

Other Highlights:

  • “Without fear of contradiction, I mean we’ve dropped the ball because we’ve focused on fixing Eskom rather than fixing grid power. There’s a difference between the two. What we need to focus on both of us”.
  • “Between 2019 and to date, we have put R230 billion into Eskom. I don’t know what people mean when they say they need money. They charge people, they generate revenue. So what is needed?”
  • “I’m not sure if Eskom is the right vehicle for this, but we need new capacity. I don’t care who provides that new capacity; if it’s someone from Mars, it’s irrelevant. What I want is electricity on the grid. .”

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