Earlier this year, President Cyril Ramaphosa famously uttered that Eskom, Africa’s largest power utility, is too important to South Africa’s economy to fail.
Originally published in the ESI Africa weekly newsletter on 2019/06/19
“Eskom is just too big to fail; too big to allow us to see it failing and we’re, therefore, not going to allow it to fail,” he said.
Since then, nothing meaningful has developed – which has become a talking point of the Ramaphosa administration; all talk and no action.
Not wanting to appear inactive, the utility turned to a March court ruling, which ordered the Gupta-linked advisory firm Trillian Capital Partners to pay back nearly R600 million to Eskom’s coffers.
Yesterday, Eskom must have felt victorious as the High Court in Pretoria has now ordered Trillian to act on the ruling and pay back the money.
However, is the consulting firm going to concede?
The money is just a drop in an ocean of debt, and even S&P Global Ratings has suggested that government’s commitment to providing Eskom R23 billion annually for three years is insufficient to improve the company’s liquidity outlook and credit rating.
Addressing the operational and financial woes through restructuring (or unbundling) of the utility, should it transpire, will be an enormous task – and naturally, will not unfold cheaply as the process in itself will have significant costs to cover.
While we wait in anticipation of securing a future for the state-owned entity, join me in a live broadcast taking place on 27 June. This webinar will unpack the multiple scenarios of an unbundled utility landscape and the country’s ideal energy mix.
Until next time.