Eskom, supplier of around 95 percent of South Africa’s electricity, is in the grip of a severe financial crisis reporting a post- tax loss of R2.3 billion ($0.17 billion) , a 0.9 percent decline in sales and a rise in gearing ratio, (which measures debt relative to equity) to 72 percent for the year ended March 2018. This company is, by common consent, over-manned and its existing fleet of power stations are poorly maintained, causing frequent rolling power cuts, which in turn affect heavily on the economy. Iraj Abedian, head of Pan-African Investments and Research Services states that Eskom “served South Africa in the 20th century but it can’t serve South Africa in the 21st century.”
The economy could have been 10 percent bigger if the country had not suffered the rolling power cuts of 2014 notes new energy lobby group Power Futures, South Africa. So important is Eskom to South Africa, which the World Bank has just declared that it is “too big to fail,” and the Treasury and credit rating agencies view Eskom as the single biggest risk to the South African economy.
In recognition, Cyril Ramaphosa, South Africa’s President assured delegates at the recent World Economic Forum in Davos that, “we are currently developing a response to the financial and operational crisis at the country’s electricity utility, Eskom.” Decisions about Eskom’s future could be made public as soon as 20th February when the government tables its budget.
Read more Afrelec Africa Power Monitor Issue 191 6 February 2019 Pages 4-5 Newbase https://newsbase.com/publications/afrelec-africa-power-monitor