In February, Finance Minister Tito Mboweni announced in his budget that R23-billion, the first of several such payments over the next 10 years, would be made to support Eskom. The first payment was scheduled for later in the year, in August.
But just five weeks later, in April, after Parliament had risen ahead of the May election, Mboweni had to write to the House to authorise R17-billion of the R23-billion to be paid. Eskom had run out of cash.
This week he announced a special appropriation Bill to bail out the money-eating machine by a further R26-billion this year and R33-billion next. The total taxpayer support for the two years will be R105-billion.
Moody’s, the credit rating agency that still has us at investment grade, said the doubling of financial support was credit-negative because it would constitute an additional strain on the budget. “While the government may try to absorb some of the costs to help rescue the cash-strapped power utility in the medium-term budget in October, the room to manoeuvre is extremely constrained,” Moody’s said on its website.
Mboweni said in February that the money came with firm conditions, notably the appointment of a chief reorganisation officer to oversee Eskom’s restructuring. This in part envisages the division of Eskom into three entities to separately manage generation, transmission and distribution, the split being intended to drive overall efficiencies.
Announcing the increased bailout on Tuesday, Mboweni said the chief reorganisation officer would be named later the same day. At the time of publishing on Thursday there was no news on the appointment, nor on a replacement for Phakamani Hadebe, who has quit as chief executive, citing health reasons.
Eskom devours public resources with no firm plan — or even an outline — of how government plans to triage the haemorrhaging. This is not to say that fixing Eskom will be politically, financially or operationally easy.
Eskom is fundamentally broken. It is yesterday’s outdated way of doing things in today’s fast-changing energy market. It is too big, too centralised, overstaffed, too dependent on a single fossil fuel input and technology, is inefficient and badly run. It has also been brutalised by rampant corruption, which added to the myriad challenges it faces.
It has been well known for some time now, and acknowledged by President Cyril Ramaphosa, that fixing Eskom is the top priority. Without a sustainable energy supply, there is no economy and no country. There is no new dawn.
Moody’s was bothered by the doubling of financial support, but also the absence of a plan. “The lack of a strategy to return Eskom to a more stable financial situation that would reduce the need for government support exacerbates the problem for the government,” it said.
As a country we do seem able to identify problems. The Zondo commission, for instance, is a conveyor belt of corruption paraded before us. We can see it. We also wait to see action taken against those who robbed us blind.
We have seen Eskom bankrupt itself. We now watch as it threatens to bankrupt all of us.