Shomang said Eskom is struggling to maintain operational sustainability due to ageing generation fleet - about 37 years on average, essential mid-life refurbishments not implemented, poor quality of maintenance due to poor workmanship with 40% of plant breakdowns due to human error.
It also faces ongoing coal shortages due to poor management and lack of investments in cost plus mines.
Eskom was also experiencing significant loss of critical skills and low staff morale, he said.
Shomang noted that the building of Medupi and Kusile power stations has suffered massive delays and cost overruns due to poor planning, poor engineering designs, poor procurement practices or poor contracting and corruption.
The costs for the plants have escalated significantly to over R300bn - Medupi from R24.9bn to R145bn and Kusile from R80.7bn to R161.4bn.
Shomang said systemic corruption, malfeasance, fraud and state capture have compromised the credibility of the organisation and eroded investor confidence.
Minister Pravin Gordhan, who cut short his attendance of the Cabinet meeting to join the parliamentary meeting, indicated that finance minister Tito Mboweni may announce a cash injection for Eskom.
“We will hear next Wednesday from the finance minister what kind of financial support Eskom will be receiving from the government,” said Gordhan.
Eskom 'technically insolvent', won't survive beyond April
Image: Reuters
Eskom is technically insolvent and at the current trajectory it will not survive beyond April 2019.
Acting DG of the department of public enterprises Thuto Shomang told MPs on Wednesday morning that Eskom's R420bn debt burden represents 15% of the sovereign's debt and that if the power utility defaults on its debt, it will threaten the economy.
Shomang said cash generated by the company does not cover operating and debt servicing costs.
The escalation of municipality and Soweto debt at around R28bn was another problem facing Eskom, including the increase in the number of Eskom employees from 32,000 in 2007 to 48,000 in 2018 with associated cost growing from R9.5bn to R29.5bn.
Shomang said Eskom is struggling to maintain operational sustainability due to ageing generation fleet - about 37 years on average, essential mid-life refurbishments not implemented, poor quality of maintenance due to poor workmanship with 40% of plant breakdowns due to human error.
It also faces ongoing coal shortages due to poor management and lack of investments in cost plus mines.
Eskom was also experiencing significant loss of critical skills and low staff morale, he said.
Shomang noted that the building of Medupi and Kusile power stations has suffered massive delays and cost overruns due to poor planning, poor engineering designs, poor procurement practices or poor contracting and corruption.
The costs for the plants have escalated significantly to over R300bn - Medupi from R24.9bn to R145bn and Kusile from R80.7bn to R161.4bn.
Shomang said systemic corruption, malfeasance, fraud and state capture have compromised the credibility of the organisation and eroded investor confidence.
Minister Pravin Gordhan, who cut short his attendance of the Cabinet meeting to join the parliamentary meeting, indicated that finance minister Tito Mboweni may announce a cash injection for Eskom.
“We will hear next Wednesday from the finance minister what kind of financial support Eskom will be receiving from the government,” said Gordhan.
SA has suffered yet another day of consecutive power cuts caused by major problems at the main energy supplier Eskom. The government has only recently announced plans to split up the state-owned entity, but potential job cuts has made that unpopular with unions.
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