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5 key things to know about Eskom – as Ramaphosa said it

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5 key things to know about Eskom – as Ramaphosa said it


President Cyril Ramaphosa spent a large part of his State of the Nation address on Thursday evening focusing on Eskom and how government plans to save the embattled power utility. 

Here are the five key things you should know, in the president’s own words.

1. Eskom is partly to blame for the ‘extremely weak’ economy

It is only when we reach consistently high rates of growth that we will be able to reverse the economic damage of our past. We make this assertion at a time when the economic outlook is extremely weak. 

Following the sharp contraction in growth in the first quarter, the Reserve Bank now projects that growth in 2019 is likely to be lower than anticipated in the February Budget. 

One reason for the lacklustre economic performance has been the load shedding early this year, together with the continued uncertainty in the supply of electricity and the state of Eskom. The lesson is clear: for growth, we need a reliable and sustainable supply of electricity.

2. Eskom is turning a corner 

Eskom is facing serious financial, operational and structural problems. Since the load shedding earlier this year, Eskom has made much progress in implementing its nine-point plan, ensuring better maintenance of its generation fleet, reducing costs and ensuring adequate reserves of coal. 

In line with the recommendations of both the Eskom Sustainability Task Team and the Technical Review Team, Eskom is deploying its most skilled and experienced personnel to where they are needed most. 

The utility’s financial position remains a matter of grave concern.

3. But its financial situation remains dire

With the current committed funding from government, outlined in the 2019 Budget, Eskom has sufficient cash to meet its obligations until the end of October 2019. 

For Eskom to default on its loans will cause a cross-default on its remaining debt and would have a huge impact on the already constrained fiscus. We will therefore table a Special Appropriation Bill on an urgent basis to allocate a significant portion of the R230 billion fiscal support that Eskom will require over the next 10 years in the early years.

4. Eskom management is still a work in progress

We will announce the appointment of a new CEO following the Mr Phakamani Hadebe stepping down. He came in at a difficult time at Eskom and has done a great deal with the board, led by Mr Jabu Mabuza, to stabilise the company. 

We will soon also be appointing a Chief Restructuring Officer, who will be expected to reposition Eskom financially with careful attention to the mix between revenue, debt and cost structure of the company.

5. On paying the bills

As a country, we must assert the principle that those who use electricity must pay for it. Failure to pay endangers our entire electricity supply, our economy and our efforts to create jobs. 

The days of boycotting payment are over. This is now the time to build it is the time for all of us to make our own contribution.


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