Mabuza: Eskom debt to peak at R500 billion
Eskom's debt will peak at half a trillion rand once Medupi and Kusile power stations have been completed, according to deputy President David Mabuza.
He made the startling the announcement in the National Assembly on Tuesday during an question-and-answer session with MPs.
Eskom is already more than R400 billion in debt.
The struggling utility has already been granted a R69 billion bailout from the government over the next three years, as well as a combined tariff hike of 22.7% from this year until 2022.
"Eskom is not generating sufficient cash to meet its operating costs, hence why it has been borrowing to make the principal and interest payments on its loans. The escalating debt servicing costs for debt in excess of R400 billion will peak at R500 billion after the completion of Medupi and Kusile,” Mabuza said.
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"The contracting model used for the construction of Medupi and Kusile did not achieve the objective of maximising local content in the build programme but instead enabled looting and corruption."
Mabuza also listed Eskom’s management operating and financial failures, including the lack of plant maintenance that directly caused the recent outages, as reasons for the utility’s struggles.
"The root causes of the current situation include a history of inadequate capacity to meet demand, as well as poor power station performance resulting from the inability to perform appropriate levels of maintenance."
Mabuza also addressed the non-payment for services by municipalities.
"The other factor is the escalation of debt in some municipalities, which is a result of difficult economic conditions and the culture of non-payment in the country. In 2018 for example, this municipal debt had reached R28 billion."
Mabuza believes the splitting of Eskom into three separate entities will turn the situation around.