Glimmer of hope in the darkness at Eskom as it reduces its debt by R83bn

Glimmer of hope in the darkness at Eskom as it reduces its debt by R83bn

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JOHANNESBURG – PUBLIC Enterprises Minister Pravin Gordhan yesterday said Eskom has managed to reduce its debt by R83 billion in the 2020/21 financial year.

The reduction of Eskom’s debt could bode well for the economy and mitigate South Africa’s credit ratings status, as the troubled utility has been the single-biggest threat to the fiscus.

Eskom’s debt has been weighing heavily on the country’s finances for many years.

Tabling his department’s budget, Gordhan said Eskom’s debt had been reduced from R484bn to R401bn, mainly because of the repayment of the maturing debt and changes in the exchange rate.

Gordhan said the government was trying to address operational efficiencies and the financial stability of state-owned enterprises, particularly in the context of a constrained fiscus.

On top of reducing its debt, Gordhan said Eskom has been recovering money that was stolen by companies with which it did business.

“The management of Eskom’s debt is one of the key priorities to return the entity on to a sustainable path,” he said. “The entity is continuing to implement its cost-reduction initiative, with a saving of R13.5bn achieved in the 2021 financial year.”

The government has committed to separate Eskom into three units – generation, transmission, and distribution – in order to manage its operations and finances better.

Gordhan said the legal separation of the transmission company would be completed by December 31 this year.

This will be while the government is working towards the legal separation of the distribution and generation companies by December 31 next year.

Eskom’s consumer debt continues to escalate. It stands at R45.1bn, of which 78 percent is owed by municipalities.

Gordhan said the Inter-ministerial Committee headed by Deputy President David Mabuza was leading the effort to resolve the municipal debt challenges.

He said one of the committee’s projects was to pilot Eskom’s active partnership model at Maluti-a-Phofung Local Municipality in the Free State.

Last week, the committee resolved that Eskom would take over the electricity distribution of Maluti-a-Phofung, one of its biggest debtors, with more than R5bn in debt.

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