Debt can only be solved by higher electricity prices – Eskom
South Africa’s embattled state power utility said its ballooning debt can only be kept in check if it’s paid cost-reflective tariffs because cost cutting offers limited respite and government bailouts are unsustainable.
Eskom Holdings SOC Ltd. executives told lawmakers on Wednesday that the company had amassed 488 billion rand ($27.3 billion) in debt by the end of March, almost 11% more than it owed a year earlier. The company’s finances have deteriorated despite the government having given it 188 billion rand in grants and loans over past decade.
Besides being denied the tariff increases it requested by the electricity regulator, Eskom has also been grappling with breakdowns at its old and poorly maintained power stations and massive cost over-runs at two new plants. Inadequate generating capacity has resulted in rotating power cuts that have reached new heights this year and dealt a further blow to an already struggling economy.
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