S African utility Eskom needs saving

Sign at a wind project. Author: Lollie-Pop.

February 14 (Renewables Now) - South African utility Eskom Holdings SOC Ltd is “technically insolvent” and “struggling to maintain operational sustainability”, the Department of Public Enterprises said in a presentation on Wednesday.

The company has accumulated ZAR 420 billion (USD 30.2bn/EUR 26.7bn) of debt. The cash it generates is not enough to cover operating and debt servicing costs. Eskom could “cease to exist at current trajectory by April 2019”, says the presentation posted on the department’s website.

The company generates about 95% of the power used in South Africa, according to its website. This week, it has been implementing rotational loadshedding and calling on residents and businesses to use electricity sparingly.

The Department of Public Enterprises said coal shortages and poor maintenance are threatening operational stability. About 40% of plant breakdowns are due to human error. The average age of Eskom’s fleet is roughly 37 years but essential mid-life refurbishments have not been implemented. Two new coal-fired power plants, currently under construction, are facing “massive delays and cost overruns due to poor planning, poor engineering designs, poor procurement practices/poor contracting and corruption,” the presentation says.

Eskom is the party with which projects secured in the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) signed power purchase agreements (PPAs).

(ZAR 10 = USD 0.72/EUR 0.64)

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Browse all articles from Tsvetomira Tsanova

Tsvet has been following the development of the global renewable energy industry for almost nine years. She's got a soft spot for emerging markets.

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