Sorry SA, but we need more money, Eskom pleads
Eskom CEO Phakamani Hadebe made a desperate plea for higher Eskom tariffs over the next three years on Monday, as well as for more money from the government, while apologising to SA for the mess the utility is in.
Hadebe was speaking in Cape Town at public hearings held by the National Energy Regulator of SA (Nersa) to interrogate Eskom’s application for a 15% tariff increase beginning in 2019-2020.
The application needs to meet Nersa’s approval before it can be applied to customers.
Eskom is in a dire financial situation, with a R419bn debt it is unable to service from the revenue it earns. It costs more for it to generate electricity than it recoups from tariffs due to a high cost base, which Nersa believes should not be made the burden of the South African public.
“I am the first to acknowledge that Eskom has contributed to its own problems. Eskom is compelled to apologise to SA for having brought these challenges. They could have been avoided. But they have built over time and the turnaround will take time. For that we apologise,” he said.
Hadebe was appointed a year ago to turn Eskom around. To do so, he said, would require a combination of higher tariffs, more financial support from the government and cost reductions.
He pledged that Eskom would save R150bn in costs over the next five years but that this would not be sufficient. Eskom also needed assistance from its shareholder.
In December, Eskom chair Jabu Mabuza told investors that the company would approach the government to request R100bn in debt relief, by taking some of its debt onto its own balance sheet.
Chief financial officer Calib Cassim said on Monday that Eskom was in a debt trap, borrowing in order to cover debt service costs.
Debt costs were expected to grow to R600bn over the next five years.
CORRECTION: Eskom’s debt was R419bn at the end of September, according to the latest financial results, and not R350bn as initially reported.