Eskom a ‘Black Hole’ – DA on Bailout Billions

Opposition party the DA has slammed power utility Eskom, saying it is a “black hole” and “no longer viable” following news of an emergency R17.6bn bailout for the ailing state-owned entity.

“Eskom and other state-owned enterprises have become a black hole that the South African taxpayer needs to constantly fill,” said the party’s spokesperson on public enterprises, Natasha Mazzone, on Sunday.

The emergency bailout followed news that the China Development Bank (CDB) failed to release some R7bn from a loan that the bank and Eskom had concluded in July 2018.

The CDB was meant to release the funds from a $2.5bn (approx. R35bn) facility, but the funds did not materialise due to “central bank exchange control requirements”, according to a Treasury report to Parliament that was signed by Finance Minister Tito Mboweni.

The planned drawdown would occur in April, according to the CDB, with the Department of Public Enterprises saying it was confident it would have the money by month end, Fin24 reported on Easter weekend.

Eskom is facing a R419bn debt burden.

Mazzone called the entity’s business model “fundamentally broken”, saying the opposition party had “long reached out … with solid solutions that would see the entity broken up into sustainable and functioning enterprises”.

She also claimed the CDB loan and bailout were being used to pay salaries and “to [burn] through billions of rands’ worth of diesel”.

Fin24 reached out to Eskom, Treasury and the Department of Public Enterprises for a response, but had not received a reply by the time of publication.

Ramos to the rescue?

On the same day, the Sunday Times reported that former Absa CEO Maria Ramos was one of three candidates being considered for the position of chief reorganisation officer (CRO) to oversee the restructuring of the power provider.

Among other things, the CRO would be responsible for overseeing Eskom’s finances, plant maintenance, and operational costs, as well as various strategic functions. They would also report to the power utility’s board as well as the minister of finance and the minister of public enterprises.

Public Enterprises Minister Pravin Gordhan, however, said he was unaware of Ramos being a possible candidate.

At the time of publication, Fin24 had not received a response from Eskom to queries on the matter.