Eskom In A Very Dire Financial Situation

South Africans are literally paying the price for Eskom’s debt.

The power utility is hoping to recover about R10-billion from customers with its over 15-percent tariff hike.

But even with this, energy sector analyst, Roger Lilley says the government has to bail Eskom out.

He said, “part of Eskom’s cost structure, is the repayment of an enormous loan. The utility owes bankers, both locally and internationally an amount of R460-billion and they have to pay something of that every month and they have admitted that the revenue that they get from selling electricity alone, is not enough to cover the cost and still meet their commitments on those loans.”

“So in effect, the loan is getting bigger because they are not able to meet it. Hence they get handouts from the government or bailouts from the government to try and cover those expenses and that is going to continue.”

“The government cannot simply write off that loan or pay the loan on Eskom’s behalf. Eskom has to generate income to cover those costs.”

“Part of the problem is that Nersa has said in the past that part of Eskom’s cost are unnecessary costs or  costs which Eskom could have avoided, had they been more careful about the way they spend money and we know there’s been lots of talk about coal prices that were inflated and things like that and we’ve read stories about how Eskom employees have basically paid more for things than they should have paid because it was coming from some family member or friend…”

“Eskom has found itself now in this very dire financial situation and the truth is, that without <a> government bailout, Eskom would go bankrupt.”

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