Eskom does not expect to receive another bailout, given the loss posted by the power utility and the conditions attached for its debt relief.
Instead it will use cash from its operations to purchase diesel.
This is the word from Public Enterprises Minister Pravin Gordhan when he was responding to parliamentary questions from DA MP Ghaleb Cachalia.
“No, Eskom does not expect support after the debt relief period,” said Gordhan.
Cachalia asked the minister whether he envisaged another bailout as the loss posted by Eskom and the conditions for the debt relief would preclude using the financial space created to top-up diesel purchases.
Gordhan said the approval of the R30 billion and the fact that no additional funds will be made available to Eskom means that they will rely on the cash from operations.
He also said the utilisation of diesel was one of the measures being executed from the National Energy Crisis Committee in order to limit load shedding and its negative impact on the economy and households.
“The debt relief is meant to assist Eskom to strengthen the balance sheet and created space to undertake further maintenance. The debt relief will enable servicing debt obligation for the next three financial years, therefore beyond the debt relief, no additional support is anticipated,” he said.
The National Treasury granted the power utility in the budget for 2023-23 debt relief which entailed R184 billion for debt settlement in three tranches and a takeover of R70 billion of its loan portfolio. The debt relief is not without strict conditions to safeguard the public funds.
Eskom is being required to prioritise capital expenditure in transmission and distribution and focus on maintenance of existing generation fleet to improve availability of electricity.
The power utility is also expected to implement recommendations from an independent assessment done by an international consortium commissioned by the National Treasury to review coal-fired power stations.
Cachalia also enquired from Gordhan how the projected shortfall from the R30 billion Eskom has available for diesel in the financial year ending March 2024 was going to be met.
“The diesel requirement will be funded from cash from operations,” Gordhan said.
He also said a total of 12% load factor was assumed for Eskom and Independent Power Producers open-cycle gas turbines (OCGTs).
“This was necessary due to the operational performance of the existing power plant fleet,” Gordhan added.
The minister said that all the OCGTs were capable of running at full capacity.
Gordhan defended Eskom for buying diesel from state-owned entities instead of availing itself of the opportunity to buy diesel at wholesale prices.
“Eskom did not receive a positive response on the application for a wholesale licence made in April 2021, where the response was received in November 2022, from the Department of Mineral Resources and Energy.”
Gordhan also said Eskom has existing contracts that must be honoured for the volumes and contract period.
“Upon the end of the current contracts, Eskom will be going to the market for additional volumes, for which it anticipates competitive prices,” he said.
Cape Times