Eskom’s debt service costs are not sustainable, warns Scopa
Members of the Standing Committee on Public Accounts (Scopa) on Tuesday warned that the R70 billion, in debt service costs, remained high and the company would struggle to survive if nothing was done.
Eskom is sitting on a massive debt of R454 billion and Cosatu has proposed that the Public Investment Corporation (PIC), and other development finance institutions, take over the debt.
This would result in these institutions getting a stake at Eskom and this will reduce the debt by half.
But MPs said on Tuesday that the debt service costs were unmanageable.
Eskom chief executive Andre de Ruyter said there were three options that could help with the massive debt.
He said they could resolve the debt situation through equity, tariff increases or higher sales.
But they would like to improve the situation on the debt, he said.
DA MP Alf Lees said the R70bn debt service costs placed a huge burden on Eskom.
Veronica Mente, of the EFF, said she was concerned about the huge debt service costs. “My concern is that their obligations are over R70bn - and they will increase. How did we arrive at such an amount?” asked Mente.
De Ruyter said they were restructuring their debt, and were grateful to the fiscus for support.
Head of generation at Eskom, Bheki Nxumalo, said they will be completing more units at Medupi and Kusile.
The power stations have been under construction for more than 10 years, with MPs saying they should be relieving the country of load shedding.
But delays have led to the incompletion of Medupi and Kusile on time.
Nxumalo said, on Medupi, that they will finish it with no extra costs.
“Out of the six units, five of them have been handed over to the project team.
“The Medupi cost of R145bn, we feel that project will be completed within that cost,” said Nxumalo.
“At Kusile, the three units have been synchronised to the grid and they are now producing,” he said.
He said the cost of R161bn for Kusile will not change.
The costs at the power stations have more than doubled in the past few years, due to cost overruns.
It was presented in Parliament a few years ago, that costs for Medupi and Kusile were sitting at below R70bn for each station. But that has now increased substantially.
MPs were also angry that the Eskom board did not attend on Tuesday’s meeting and demanded action.
Scopa chairperson Mkhuleko Hlengwa said the board was undermining Parliament and they will not allow it.
Deputy Minister of Public Enterprises Phumulo Masualle said he was not aware the board would not come.
When he was informed about the meeting, he was under the impression that the Eskom board would form part of the meeting.
Hlengwa said this would not be allowed to happen, as Eskom was facing a crisis and the country relied on it for electricity.
As Parliament, they want all the answers on Eskom.