I don’t know how many budget speeches I have gone to waiting for the final solution to Eskom’s multi-billion rand debt problem and come out confused or worse, disappointed. Without the capital injection, the debt was secured only when the ailing parastatal was ordered to build the Kusile and Medupi power plants from the entire balance sheet last year.
What we know then when the construction of the coal-burning station begins, is that Eskom cannot do it alone – especially if the National Energy Regulator of SA will not be amenable to a rapid and steep increase in tariffs to increase revenue. Yes, the rates were not available due to political pressure, which left Eskom with the ballooning and unsustainable debt position it is today.
In that position, they are Eskom registered company, we will expect the issue of the right to raise capital to remove debt obligations. (Very simplistic and very simplistic: the right of the Issue Basically when the company that has said 100 Shares valued at R20, issues more 10 Shares for existing shareholders to buy at R15, thus raising an additional R150 for the company for debt or debt. buy new equipment.)
But unfortunately Eskom is not registered and only has the state as its sole shareholder. What this means for me is that the state through the state treasury must make a plan for the debt burden. Simplistic, I understand, especially given just how badly Eskom has managed the expansion project since 2008. Still, there is where else the management of the company can finally get help.
Due to the hardballing of the country, and especially in the treasury, Eskom has hobbled under the weight of its debt burden, clearly affecting the ability to maintain a suite of coal-fired stations that average around 41 years. The sixth stage of open-disposal, which we see once again, has a lot to do with the company’s ability to service its operations – they are dying right before our eyes.
But since the ministry of finance is always heralded as the blue-eyed child among the many ministries we have, their decision on Eskom and its debt is beyond doubt. But at what cost? Now, it is about 12 hours to reduce the burden that is reducing the economy and putting pressure on the fiscus through lower tax receipts.
On Wednesday, Finance Minister Enoch Godongwana, will deliver his second budget speech – where I expect him to follow the same path as his predecessors, by kicking the can down the road, once again. The comments on Eskom’s debt are nothing more than talking about possible solutions. I’m sure, but love the egg on the face.