Internecine lawfare hampers Eskom as it burns through bailouts




As we all know, we now pay twice for electricity: once through the tariff and again when we pay our taxes. I wonder what my electricity is costing if the fiscal support is included.

Finance Minister Tito Mboweni said in his February budget that R23-billion a year would be given to Eskom for the next three years.

This week he used a special appropriation Bill to add R26-billion this year and R33-billion next year, bringing government’s total support over the next two years for our own home-grown version of an imploding death star to R105-billion.

Eskom is expected to reveal the perilous state of its finances next week, when it releases its annual results. Its loss for the year is expected to be about R20-billion.

It reported revenue of R90-billion at the halfway stage in November, but warned that it expected its second-half numbers to be lower.

Its sales have been moving sideways or down, a combination of a moribund economy (at least in part Eskom-induced) and its customers cutting back on usage or switching to alternative energy sources.

Eskom’s last full-year report put its sales at R175-billion. Assuming no change for the present year, the R49-billion (R23-billion plus R26-billion) from Mboweni this year tops this up by 28%.

Its average tariff, as published in its 2018 integrated report, was 85 cents a kilowatt hour. Mboweni’s handout this year adds 23.8 cents.

There are other ways to think about these numbers.

The country has 17-million households. The R105-billion bailout over the next two years equates to R6 200 per household.

We have 7.6-million taxpayers; this is an average of R13 800 per taxpayer over the two years.

If we express the cost in terms of green energy opportunities foregone, the R105-billion over the next two years is half the R200-billion spent procuring energy through the renewable energy independent power producers programme.

Analysts estimate that borrowings to fund the Eskom bailout could push our budget deficit to 6% of gross domestic product, with Reserve Bank governor Lesetja Kganyago warning this week that bailouts for state-owned companies risk pushing the country’s debt-to-GDP ratio to among the highest in emerging markets.

President Cyril Ramaphosa announced in his State of the Nation address in June that a chief restructuring officer would be appointed to help the Eskom chief executive plug the holes in the sinking ship.

Mboweni said on Tuesday the chief restructuring officer would be named later in the day. But we’re still waiting. We’re also waiting for a new chief executive after Phakamani Hadebe quit, presumably buckling under the inordinate strain.

These are Herculean jobs, requiring considerable financial, engineering and management skills. They also need heavyweight political backing.

We have such a politician in the public enterprises minister, Pravin Gordhan, but he finds himself embroiled in internecine lawfare with the public protector, now with a set of damning court judgments against her, over a unit formed in the tax authority 12 years ago and a pension payout made nine years ago, even though both matters have already been subject to scrutiny by independent authorities.

Kevin Davie

Kevin Davie is M&G's business editor. A journalist for more than 30 years, he has worked in senior positions at most major titles in the country. Davie is a Nieman Fellow (1995-1996) and cyberspace innovator, having co-founded SA's first online-only news portal, Woza, and the first online stockbroking operation. He is a lecturer at Wits Journalism. In his spare time he can be found riding a bicycle, usually somewhere remote.


Salie-Hlophe accuses Goliath of lying and racism

In response to Goliath’s gross misconduct complaint, Salie-Hlophe says Goliath has ‘an unhealthy obsession with my marriage’

Treasury is still seeking SAA funds

The government has committed an additional R2-billion to the airline, but has yet to pay it out

‘There were no marks on his neck’, Neil Aggett inquest...

The trade unionist’s partner at the time he was detained at John Vorster Square says she now believes his death was not a suicide

Press Releases

Boosting safety for cargo and drivers

The use of a telematics system for fleet vehicles has proved to be an important tool in helping to drive down costs and improve efficiency, says MiX Telematics Africa.

Silencing the guns and firearms amnesty

Silencing the guns and firearms amnesty

Gender-based violence is an affront to our humanity

Gender-based violence is an affront to our humanity

UK-Africa investment summit 2020: Think Africa Invest SA

UK-Africa investment summit 2020: Think Africa Invest SA

MTN unveils TikTok bundles

Customised MTN TikTok data bundles are available to all prepaid customers on *136*2#.

Marketers need to reinvent themselves

Marketing is an exciting discipline, offering the perfect fit for individuals who are equally interested in business, human dynamics and strategic thinking. But the...

Upskill yourself to land your dream job in 2020

If you received admission to an IIE Higher Certificate qualification, once you have graduated, you can articulate to an IIE Diploma and then IIE Bachelor's degree at IIE Rosebank College.

South Africans unsure of what to expect in 2020

Almost half (49%) of South Africans, 15 years and older, agree or strongly agree that they view 2020 with optimism.