Grim revelations are coming in by the bucketful for the beleaguered Eskom group. Currently on life support, the Public Enterprises Department says the plug will be pulled “within a couple of months” as the firm looks set for insolvency. This, coupled with recent load shedding developments, is up there with the flailing SOE’s darkest days.
“Zombie” SOE set for re-animation
However, it’s worth noting that there’s the budget speech coming up next week. It’s overwhelmingly likely that Eskom will receive an enormous bailout package to help it limp through the upcoming months. It’s another hammer blow for the outfit, whose brief flicker of optimism has been dramatically dimmed this week.
The company were looking forward to restoring a further 6000MW of power to the grid by the end of Wednesday. That, however, has been jeopardised by a nationwide Cosatu strike. With many members of the trade union also working for Eskom, their decision to down tools is sure to have an impact on the ailing utility.
What has plunged Eskom towards the abyss?
In a report shared by the Public Enterprises Department on Wednesday, they identified several key areas that lead them to their shock statement. This isn’t a case of fear-mongering from the government, they’ve come equipped with the receipts to explain why Eskom could be dead by April:
Debt levels – which account for 15% of the national debt – threaten the economy.
Cash generated doesn’t cover operational costs.
Municipal debt – particularly in Soweto – is escalating monthly
The Employee wage bill has tripled to almost R30bn a year – money Eskom cannot afford.
The generation fleet is old and maintenance has been poor for decades.
Eskom declared “technically insolvent” amid load shedding crisis
Staring down the barrel of insolvency, Eskom are now reliant on Finance Minister Tito Mboweni dragging them out of a black hole. The country is currently under the duress of Stage 3 load shedding, with power cuts likely to last until at least the end of the week.
These latest developments come as Cyril Ramaphosa plans to break the outfit into three separate departments. This has been met by fierce opposition though, as many feel it’s an unwanted step towards the privatisation of the firm. In fact, the SACP accused the government of sabotage in order to remove Eskom as a public entity.