For more than a decade, Eskom has imposed power cutbacks in Africa’s most industrialised nation, stifling economic growth and deterring investment. It owes about 400 billion rand ($25 billion) in debt, which it pays off with government bailouts.
How much debt does Eskom have?
Eskom’s total debt is currently R401.8 billion. Its gearing ratio went from 71 percent to 67 percent.
De Ruyter explained that debt servicing charges of R31.5 billion contributed to the net loss.
Municipal debt continues to be a problem, with arrears rising by 26% to R35.3 billion. Municipal debt has risen to R39 billion since the end of the financial year, according to De Ruyter.
There were some successes, as the power company saved R14.4 billion in operational costs during the year under review, compared to a target of R14.1 billion.
How much debt is Eskom in 2021?
Electricity costs are expected to climb further, according to Eskom “Tariffs that were “cost reflective” were required to ensure the highly indebted parastatal’s long-term viability.
Calib Cassim, Eskom’s chief financial officer, said at a media conference on Tuesday that while gross debt had been cut by R81.9 billion to R401.8 billion, a 16.9% decline, the company was still a long way from being a sustainable commercial entity.
Despite the fact that the higher rand had a favorable impact on Eskom’s financial results, the high cost of servicing the outstanding debt, working capital requirements, growing municipal debt, and sub-investment grade credit ratings remained a concern.
Despite the tough circumstances during the Covid-19 pandemic and lockdowns, Cassim claimed Eskom made an operating profit of R5.8 billion, but its net debt servicing cost of R31.5 billion resulted in a net loss after tax of R18.9 billion.
“In the near to medium term, this picture is likely to remain unchanged. “However, relying on government assistance reduces the material uncertainty about Eskom’s viability,” Cassim said.
Why is Eskom in so much debt?
Negotiations to reduce the state power utility’s R402 billion debt to a tolerable level are taking too long, according to its CEO, Andre de Ruyter.
Eskom, which generates the majority of South Africa’s electricity, is unable to cover its operating and debt service costs and is reliant on government bailouts to stay afloat. It will also need to borrow additional funds to assist it shift away from polluting coal-fired power facilities, which currently provide the majority of its electricity.
How much does Soweto owe Eskom?
The debt owed by Soweto residents to Eskom was lowered to R7. 5 billion this year from R12. 8 billion the previous year after Eskom wiped off R5. 3 billion.
Is Transnet a debt?
Transnet has been in a squabble with the auditor-general over differing opinions on how to account for the multi-billion rand 1064 locomotives, which has caused the company’s financial statements to be delayed.
Transnet’s audit qualification has already led in a breach of loan covenants, with a sum of R19.1 billion outstanding as of September 30, 2021.
Transnet’s total debt maturities for the 12 months ending September 2022, according to Moody’s, would be R22 billion, including the $1 billion bond maturity in July 2022.
Is Eskom owned by the government?
Eskom is owned entirely by the government of the Republic of South Africa. The Minister of Public Enterprises is the shareholder representative.
Is Eskom a natural monopoly?
All power generation is connected to Eskom’s national transmission infrastructure, which transports electricity from generators to consumers. Transmission is a monopoly by nature. As a result, Eskom is a vertically integrated near-monopoly that manages generation, transmission, and distribution.
Who is the owner of Eskom?
Residents of Soweto are advocating for the implementation of an R200 monthly flat tariff for energy because they cannot pay existing rates.
Community leader Michael Mosiuoa told eNCA that many Soweto residents are seniors who cannot afford the city’s and Eskom’s current pricing.
“We propose a monthly fixed charge of R200.” Soweto residents are willing to pay. He stated, “They have never made the mistake of not paying.”
President Cyril Ramaphosa promised locals that their electrical problems will be rectified shortly, prompting the latest push for a flat tariff for electricity in Soweto.
During an ANC campaign in Soweto over the weekend, Ramaphosa encountered demonstrations from residents who complained about frequent power shortages.
Do Soweto residents pay for electricity?
Eskom’s efforts to reclaim the R40 billion owed by delinquent municipalities have gotten a boost after a court judgement against a Gauteng municipality effectively permits Eskom to attach the council’s assets.
In the Gauteng High Court on Thursday, Eskom secured a summary judgment against Emfuleni municipality for R1.3 billion in unpaid bulk energy services in 2019.
As a number of municipalities fail to pay their bills, municipal debt to Eskom, which supplies almost all of SA’s power and relies on government bailouts to stay afloat, continues to rise at an alarming rate.
“The present summary decision gives us numerous possibilities to recover the amount owing to us,” said Daphne Mokwena, Eskom’s Gauteng senior manager for customer services. “We could seize and transfer Emfuleni’s electricity infrastructure, which includes substations and power lines, and use the proceeds to pay off the judgment debt and/or attach the municipality’s known electricity revenue sources through garnishee-type orders.”
Eskom has threatened to cut off supply to delinquent municipalities in the past, yet people owing them more than R140 billion for services. Some inhabitants claim that they are unable to pay their electricity costs due to unemployment, a condition exacerbated by the economic consequences from the Covid-19 outbreak.
Eskom, widely regarded as the biggest financial danger to South Africa, has more than R400 billion in debt that it can’t cover with revenue.
With its own finances in jeopardy, the power company has taken a harsher line against misbehaving municipalities as it fights to stay solvent.
Emfuleni owes Eskom R3.5 billion, while Merafong Local Municipality owes R570 million, Randwest Local Municipality R510 million, City of Tshwane R200 million, and City of Ekurhuleni R8 million.
According to Eskom, the Mogale City Local Municipality has reached an agreement on an outstanding debt of more than R361 million and has been making payments on time.
Only the City of Johannesburg (City Power), Midvaal Local Municipality, and Lesedi Local Municipality in Gauteng had good payment records, according to Eskom.
Concerns that failures at the local government level imperil corporate survival and stymie job creation efforts have brought the dysfunction of municipalities across the country into sharp focus.
Sakeliga, a corporate lobbying group that primarily supports Afrikaans-owned businesses, recently petitioned the courts for an order prohibiting two towns in the North West from accepting direct payment for services such as water and electricity. It claims that its case is part of a long-term strategy to reverse state deterioration at the local level across the country, allowing business settings to recover from years of mismanagement and corruption.
Sakeliga has sought the court to appoint a special independent paymaster to administer the towns of Ditsobotla (previously Lictenburg and Coligny) and Naledi (Vryburg). The lobbying group seeks to create a separate organization to accept power and water payments from the towns in a bank account held in the municipality’s name but not under its control.
Which municipality owes Eskom?
China is responsible for about 4% of South Africa’s annual GDP. South Africa received many tranches of Chinese loans, some of which have sparked controversy due to their opaque terms and possible ties to corruption in the country. This includes a contentious US$2.5 billion loan from the Chinese Development Bank to South Africa’s state-owned electricity firm Eskom, which was arranged during the Jacob Zuma administration. The Zondo Commission of Inquiry into State Corruption found another US$2.5 billion loan to Eskom from a private Chinese company, Huarong Energy, to be improper, prompting Eskom chairperson Jabu Mabuza to declare that Eskom would not repay the loan due to irregularities and corruption involved in its issuance.
During Cyril Ramaphosa’s presidency, the China Development Bank provided an additional R370 billion (US$25.8 billion) loan to push a 2018 economic stimulus package. The loan was initially described as a “gift” by the South African government, and the terms of the loan were kept secret, generating widespread public outrage. The government defended the loan by claiming that the interest rate was not excessive and could not be revealed due to confidentiality agreements. The Democratic Alliance political group, which is in opposition to the loan, has accused it of putting the country in a “debt trap.”
How much does SA owe China?
“We’ve started paying them because we want to be known as good debtors rather than bad debtors as a country,” Ncube added.
In addition to making its first payments in two decades to the Paris Club’s 17 members, he claimed Zimbabwe was also paying off its debts to multilateral lenders.
“We’ve started making token payments to the World Bank, the African Development Bank, and the European Investment Bank,” Ncube explained.
It will take a massive effort to clear Zimbabwe’s debts or merely catch up on payments.
Zimbabwe owes foreign lenders $11 billion, which is roughly 71 percent of the country’s GDP. Payments in arrears account for $6.5 billion of the total.
To get its debt payments under control, Ncube said the government will require a “sponsor.”
The goal, he said, was “truly to attack those arrears with the World Bank and the African Development Bank, the preferred creditors.”
When Zimbabwe’s economy collapsed 20 years ago under then-President Robert Mugabe, the country defaulted on its loans.
President Emmerson Mnangagwa, who ascended to power following a coup in 2017, wants to re-establish connections with Europe and the United States, which had been largely severed due to Mugabe’s election rigging and human rights violations.
Mnangagwa, who was once Mugabe’s top deputy, is one of the senior government figures barred from traveling to the United States or banking in Europe.
Western governments froze his assets in protest of human rights crimes, and have shown little interest in easing the restrictions so far.
In July, the United Kingdom imposed fresh sanctions against a Zimbabwean official for illegally redeeming treasury bills for ten times their face value.
Making even minimal payments on its debts, according to Gwanyanya, shows the world that Mnangagwa intends to do business differently than his predecessor.
“The fact that Zimbabwe has begun to do so at a time when our debt is quite high would allow us to tap into some external capital,” he said.
Since 2000, Zimbabwe’s economy has swung wildly, declining at an incredible rate during years of hyperinflation before battling its way back to growth in 2009.
The economy was forced back into recession by Covid-19 and a drought, with inflation returning to triple digits.
Inflation has returned to double digits (56 percent in July, down from 106 the month before), and Ncube has lofty goals to push the country into the global middle class by 2030.
Zimbabwe will require funds and investors to do this. One method to improve the country’s attractiveness is to pay off its debts.
“It’s really a gesture,” Gwanyanya explained. “It doesn’t imply we’ll be able to pay off the entire debt, but it will send a signal to the rest of the world about our readiness to service loans, changing people’s impressions of the country.”
