National Union of Mineworkers calls for Eskom board to be disbanded
JOHANNESBURG - The National Union of Mineworkers (Num) called for the disbanding of the Eskom board after the power utility tumbled back into load shedding this week days after warning that its was near collapse and its coal reserves almost depleted.
The union said the board had failed to deliver a credible turnaround plan and sustainable business model for Eskom.
Energy sector coordinator Paris Mashego said the board’s 2035 strategic plan remained concealed in secrecy.
“We, therefore, call upon President Cyril Ramaphosa to retire the current board, which has failed to develop a comprehensive turnaround strategy to save ESKOM, from unbundling and privatization,” Mashego said.
In a tumultuous week, Eskom this week escalated its load shedding from stage 1 to 2, cutting off about 2000 megawatts from the grid and leaving sections of the capital Pretoria with no electricity for more than 12 hours.
Eskom said it could take up to six months to replenish its depleted emergency reserves which were sitting at less than a third of the acceptable one month’s worth of supply.
The utility said its profits had plummeted 89 percent while debt soared to R419 billion in the six months to end September compared to a corresponding period last year.
Yields on Eskom dollar-denominated bonds rose 4 basic points to 8.93 percent heading for highest closing level since March 2016.
Eskom chief executive Phakamani Hadebe said Eskom was not able to service its operations.
“The money we make is not good enough to service our debt, which has risen from R40bn in 2007 to R400bn in 10 years,” Hadebe said.
Eskom was is also tied in a contract with the Gupta-owned Tegeta Exploration and Resources in which it has to paid hundreds of millions for coal it had not received from Optimum mine, putting further pressure on the grid and fuelling the risk of load shedding.
Ratings agencies and the National Treasury have always identified Eskom as the biggest single threat to the country’s, charging that the utility exerted unnecessary pressure on the fiscus.
Economists this week warned that reliable electricity supply could be the biggest challenge to President Cyril Ramaphosa drive to raise $100bn in five year.
The utility said most of its debt came from municipalities who had defaulted on payment arrangements.
It said the debt had ballooned 25 percent from R13.6bn in March to R17bn in September.
The utility said its wage bill had also weighed up on its finances while costs rose to R15.2bn from R11.9bn.
Investec economist Lara Hodes said declining electricity sales underpinned by the weak demand environment continued to add to Eskom’s financial woes.
“Higher electricity prices would further weigh on the inflation outcome, suppressing already subdued economic growth,” Hodes said.