In an effort to shore up its balance sheet, Eskom is looking to government to absorb R100 billion of its debt Chairman Jabu Mabuza told the Business Day newspaper.
The plan, which forms part of the utility’s turnaround strategy, would add 2% to debt-to-GDP ratio and according to the report is likely to be seen as negative by ratings agencies. Mabuza made the comments to Business Day as Eskom was meeting investors on a roadshow to London and the United States this week.Increasing debt
This comes after Finance Minister Tito Mboweni said Eskom should go to bond markets for funds rather than rely on state bailouts, which have been used in the past.The utility’s debt has increased to R419 billion, and the company has resorted to load shedding as insufficient spending on maintenance has reduced its ability to generate electricity.
Mabuza further confirmed the utility’s dire financial situation at a news conference last week noting that asset sales could not solve Eskom’s problems and that a bailout or debt relief were preferable. The utility expects to make a loss before tax of more than 11.2 billion rand this financial year.
