Eskom too big to fail

South Africa will announce a package of measures to stabilise its ailing power utility.

07 February 2019 | Energy

Cyril Ramaphosa; President of South Africa: “It is too important and is too big to fail. And we will not allow it to fail.”

Eskom was too big and too important for South Africa to be allowed to fail, President Cyril Ramaphosa said on Tuesday.

The troubled South African state-owned power utility is expected to post a R20-billion loss for the financial year to March, up from the R15-billion forecast during the mid-year results, as overall expenses widened during the period.

Speaking at the Mining Indaba in Cape Town, Ramaphosa admitted that Eskom was currently facing significant operational, financial and structural challenges, but said government was giving detailed attention to the crisis.

"The energy, transport and water sectors, all of which are important for the mining industry, represent the bulk of the infrastructure investment spending plans that the government is planning for the years ahead," Ramaphosa said.

"Eskom's contribution to the health of our economy is too great for it to be allowed to fail. It is too important and is too big to fail. And we will not allow it to fail.

“Restoring and securing energy security for the country is an absolute imperative. In the coming days, we will be announcing a package of measures to stabilise and improve Eskom's financial, operational and structural position and to ensure security of energy supply for the country. Restoring energy security is an absolute imperative for the country," he said.

Ramaphosa is expected to announce this package of measures, or give a strong indication of what it would entail, during the State of the Nation Address today.

It was reported that government might push for the partial privatisation of some operations within Eskom.

The National Energy Regulator of South Africa (Nersa) has concluded its countrywide public hearings into Eskom's tariff increase application for the next three years, in a bid to recoup more than R20 billion.

Eskom had initially applied for an increase of 15% a year for the next three years, but it has since revise its tariffs application upwards to between 45% and 48%, due to its financial position. - Nampa/ANA

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