South Africa’s ailing power utility Eskom is technically insolvent and if the conditions remain unchanged it might fail to exist by April, at least according to the briefing presented by the department of public enterprises before Parliament’s Public Enterprises portfolio committee on Wednesday. The ongoing coal shortage, lack of investment in mines and an aging fleet have been cited as reasons for Eskom’s poor operational sustainability.
The company is currently in a bad financial position with negative cash flow and a debt burden which stands at R420 billion, posing a significant risk to the economy. The power utility is not making enough money to cover its operating and debt service costs.
While addressing Parliament’s Public Enterprises Committee on Wednesday, Public Enterprises Minister Pravin Gordhan said he hopes Eskom’s load shedding problem will get resolved within the next 10 days. But, he warned that the blackouts will still continue until April, reported Eyewitness News.
Gordhan agreed that the government owes an apology to the public as mismanagement and corruption are the main problems that led to the power utility’s pathetic condition today. He said that he believed Eskom’s load shedding reached its peak in December, but the latest incident at one of its power stations had come as a surprise.
“Forty percent of plant breakdowns are due to human error,” the minister pointed out.
He told Parliament’s portfolio committee that the government is concerned about the impact load shedding will have on attracting investment.
Gordhan said President Cyril Ramaphosa will address the Eskom issue during the State of the Nation debate on Thursday. Last week in the state of the nation address, Ramaphosa announced plans to split into three entities – generation, transmission, and distribution.
Considering Eskom’s current state, the South African government has reportedly called top engineers from Italian energy company Enel to help sort out the power utility’s maintenance issues. Meanwhile, the power utility will implement stage 2 load shedding on Thursday between 08:00 and 22:00.