South Africa’s government has announced plans to take over up to two-thirds of the $22 billion debt accumulated by the state electricity monopoly Eskom, as it battles to overcome the country’s rolling energy blackouts.
Finance minister Enoch Godongwana says the debt transfer would “ensure Eskom’s long-term financial viability” after years of state cash injections that have failed to turn round the utility’s collapsing power plants that generate nearly all South Africa’s electricity.
South Africa’s economy has been hit by the power outages, which can last up to 10 hours a day in some areas as Eskom’s ageing coal plants break down without warning.
Eskom has already received about $7.8 billion (R140 billion) in cash bailouts under a R230 billion programme that was announced in 2019, and the utility’s debts are backed by more than R300 billion of state guarantees.
The state’s move to take over billions of dollars of Eskom’s debt is seen as a turning point as it could free up funds for the utility to spend on power-plant maintenance and completing new power stations.
Nevertheless, South Africa’s Treasury will set conditions on the Eskom debt transfer, such as an independent review of the problems with its power plants.
Energy analysts opine that South Africa’s power woes will end when government allows new generation with reliable low cost, wind, and solar installations from private stakeholders.