At the Financial Times Africa Summit in London on Monday afternoon, President Cyril Ramaphosa said the SA government was on the verge of announcing new ideas on how to deal with struggling energy utility Eskom’s crippling debt, which currently sits at an estimated R440 billion and rising.
The president did not hide Eskom’s woes from the world.
“One of the greatest challenges to our economy is Eskom, which has huge debt, liquidity problems and operational challenges. We have embarked on a process to strengthen governance, cut costs, improve revenue collection and increase energy availability,” Ramaphosa said, during his opening address at the summit.
“We hope that Moody’s will take note of what we are seeking to do and we are coming up with a number of ideas, innovative ideas of how to deal with the debt in Eskom,” he continued.
“I think Moody’s and others will be very happy with the announcements that we are going to make”.
The World Bank recently cut South Africa’s growth forecast, and warned that us that we need to avoid a downgrade from Moody’s in November if we want to steer clear from hampering investment. Moody’s is the only ratings agency that has not yet downgraded us to sub-investment grade.
Ramaphosa opened up at the Summit about the toll corruption has taken on Eskom’s bottom line.
“A lot of money was siphoned out of state coffers through corrupt means. Some of those [operations] were sophisticated. Some of those included blue-chip companies of great world reputation … that is the shocking part,” he said.
The president had addressed the issue of Eskom’s turnaround plan recently while answering questions at the National Council of Provinces (NCoP)
The president said government would now “appoint a CEO, add to and augment the board, deal with the debt, deal with the operational aspects and the technical aspects, and deal with the challenge of non-payment”.
This followed a question from DA MP Dennis Ryder, who accused the president of being involved in “state capture at Eskom”, and questioned why more had not been done by the president, who has been in charge of overseeing the turnaround at Eskom since 2014.
Ramaphosa said while it was “easy to point fingers, and to find people to blame, my own approach is let us all work together to try and reposition Eskom because Eskom is just too big to fail, it’s just too important to fail”.
He said South Africans should “look at the restructuring that is ongoing” and “applaud that we can now see the light of day”.
According to the president, Eskom’s situation was “a challenge all of us should face up to”.
“If ever there was a time, this is not a time for finger-pointing; this is a time for trying to bring good ideas together to solve the problem,” he said.
“As governments we are committed to create the necessary enabling environment for business to flourish. I call on the investor community to harness the climate of reform that is sweeping the continent and take advantage of its momentum.”
— Presidency | South Africa ???????? (@PresidencyZA) October 14, 2019
(Compiled by Daniel Friedman.)