OPINION | Yet another Eskom bailout looming
How would you destroy an iconic institution? Easy. Study Eskom, particularly since 1996. If you are dedicated to destruction, within a generation, you would have successfully killed off the dream of a new nation that started with much potential.
With it you’d have killed off any hope of transforming the majority of the citizens from low-income wage earners to join their white compatriots in a middle-income society.
This is what has been achieved by democratic SA, with Eskom now living from hand to mouth.
The R5bn bailout that finance minister Tito Mboweni handed over to Eskom in March is the clearest testament to the government’s total commitment to killing off the utility. Presumably, this came from the R350bn the government has guaranteed to back Eskom’s R420bn (and growing) debt.
Officially, the bailout became necessary after the delay of a loan disbursement from China Development Bank. But any thinking person knows the real reason is that Eskom needed the money to report, misleadingly, that it has cash in the bank. It is a deceptive accounting entry designed to hide the reality of a bankrupt institution at its financial year-end.
Any thinking person knows Eskom has been gutted – by corruption, by mismanagement, by political interference, by lack of skills at the highest of levels.
Any thinking person knows Eskom does not have sufficient working capital to remain a going concern.
In 2001, Eskom was the world’s best supplier of electricity – cheap, reliable and guaranteed to those already connected to the grid. At around the same time, it was among the 10 best electricity producers in the world.
This bailout comes on top of the R69bn Mboweni committed the National Treasury to dishing out to Eskom over the next three years. Had Eskom not received the cash, it would have failed to settle debt obligations due at the end of March.
Again, in case you need any reminder: In 2015, Eskom received a R83bn bailout – R23bn in cash and another R60bn in a debt write-off. Then in February 2018, the Public Investment Corporation had to extend an emergency R5bn bailout as Eskom was again faced with the prospect of not being able to meet its financial obligations. Has all that cash fixed the utility? Not a chance!
Standing between Eskom and collapse are the unlimited taxpayer funds in the hands of the same government that has brought about this disaster.
I say “unlimited” because other incompetent, corrupt states have resorted to printing cash to delay the inevitable. Sensible as many in this government may be, that suicidal approach is not beyond any government.
Consider this: In the six months to September, Eskom generated R27.1bn cash from operations. Then it paid R27.5bn to providers of debt to settle maturing borrowings. Another R17.7bn was paid in interest costs.
What was left to spend on maintaining its ageing capital assets or expanding its generating network? Nothing.
You’d be forgiven for assuming a company that built its first power station in 1925, has finally got the hang of it. Instead, prepare for another bailout...