Eskom says its finances have deteriorated further to a point where it now describes its situation as dire. The parastatal is struggling to raise money in capital markets due to its bad corporate image and is currently R23 billion in the red.
In recent years, Eskom has become synonymous with corruption allegations and boardroom dramas. This has now landed the state company in deep financial trouble.
Eskom needs to raise R60 billion per annum in order to see the construction of its Medupi and Kusile power stations to the finish in 5 years’ time. It has managed to raise about half of that for this year. Securing the rest of the money is proving to be difficult.
To make matters worse, money generated from the sale of electricity continues to dwindle amid the current weak economy.
Nersa’s decision to deny it a 20% electricity tariff hike it wanted for this year – instead allowing it only a 5% increase – will make another R30 billion hole in Eskom’s finances.
It is not ruling out retrenchments. Unions say they are gravely concerned about the situation at Eskom. However, they are reluctant to talk openly ahead of the start of wage negotiations in April.
Lately, the government is not in the mood of dishing out bailouts to parastatals due to its own financial constraints arising from dwindling tax revenue. What the future holds for Eskom this year is a big unknown.
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