Minister of Finance Tito Mboweni announced during his mid-term Budget Speech that National Treasury is on board to help Eskom, but that this support comes with strict terms and conditions.
Government has announced a comprehensive set of structural reforms for Eskom and the energy sector, which government is supporting with R230 billion over the next 10 years.
The minister mentioned that for the sizeable support required, it cannot be business as usual, and added that Eskom must run its current plant and equipment better, achieve other operational efficiencies, including much better cash management, and fast-track the separation of the utility into three parts.
“The fact that government is going to back Eskom is great news. It is also important that government has realised that Eskom’s problems cannot be remedied with a quick fix, and that Eskom-related commentary in the medium-term Budget Speech aligns to the recently announced IPR.
“Eskom needs to transform its business model and a collaborative approach with stakeholders is critical to ensure much-needed improvements in efficiency so that Eskom is prepared for the future,” says Eaton Africa managing director, Seydou Kane.
The minister also touched on diversifying power generation by granting licenses for small-scale generation.
Eskom’s vital role in the economy creates a huge sense of urgency in remedying its ills, and he emphasised the importance of all South Africans in address the power utility’s challenges.
“The clause in the IRP that allows South Africans to generate energy presents an alternative and could fast track progress. While some parties within Eskom could be concerned that a customer that can self-generate will leave the grid and never return, the reality however, is that these very same customers are the ones that should be retained to prevent a utility death spiral,” says Kane.
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