JOHANNESBURG - South African state power utility Eskom aims to slash debt to R200 billion from about R450bn now, it said in a presentation on Thursday, as it struggles to recover from a deep financial crisis.
Eskom generates more than 90 percent of the electricity in Africa’s most industrialised economy but has battled to keep the lights on, a factor that helped push South Africa into recession even before the coronavirus crisis struck.
Eskom’s problems are among the biggest challenges for President Cyril Ramaphosa, who has been trying to rebuild investor confidence after a decade of scandals and policy missteps under his predecessor, Jacob Zuma.
Eskom did not say in the presentation how long it would take to halve its debt or how it aimed to achieve it.
The company listed among its objectives reaching a 35 percent earnings before interest, taxes, depreciation and amortisation (Ebitda) margin, without specifying a time frame.
Chief executive Andre de Ruyter told a news conference the utility would start a “renegotiation process” with independent power producers to try to lower electricity costs for South African consumers.
Power demand had fallen by an average of 6,000 megawatts because of the economic impact of the coronavirus crisis, chief operating officer Jan Oberholzer said.
On Wednesday deputy minister of public enterprises, Phumulo Masualle said Eskom's ability to collect revenue would be severely hampered by the economic fallout of the coronavirus health crisis,
Masualle told the portfolio committee of public enterprises that the struggling power utility was weakened further by the shut down of the economy, which had seen companies close, and households and municipalities lose the ability to pay for power.
"The closing down of economic activity meant that the new challenge for Eskom would be the inability to raise revenue," he said.
Masualle said there was some consolation in the fact that Eskom had been able to use the lockdown, which started on March 27, to perform more plant maintenance, meaning it would have greater capacity when the economy was reopened.
"I'm sure that we will have much better levels of energy availability going forward," he said.