Kgosientsho Ramokgopa, Electricity and energy minister, has warned that Eskom is ‘at risk of collapse’ if its debt problem is not addressed, referring to South African municipalities that owe Eskom R78 billion, which is also increasing at ‘an alarming rate’.
Ramokgopa stated that the problem must be addressed to protect the power utility’s ability to fulfil its mandate.
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‘There’s no possibility under the sun that we will collect that R78 billion,’ said Ramokgopa.
Eskom needs this money to perform maintenance and reinvest in its infrastructure to ‘improve its generation fleet’s performance’, as reported by Daily Investor.
‘Municipalities must pay that money. However, on an objective ground, they simply don’t have the means to pay,’ said Ramokgopa.
Because of the current debt trajectory owed to Eskom, this threatens the power utility’s future existence, according to Ramokgopa.
‘To give you the magnitude of the problem, if we don’t resolve it, our projection is that at the current rate, by 2050, Eskom will be owed R3.1 trillion,’ said Ramokgopa.
‘Eskom will collapse. Generation capacity is going to be compromised. So, we must resolve this problem,’ Ramokgopa added.
In addition, the rising municipal debt burden is ”the most urgent task’ Eskom is currently confronting.
‘It is municipality-related, but we can’t fold our arms. We need to help them from a technical point of view,’ said Ramokgopa.
Ramokgopa emphasised that the continued non-payment is affecting Eskom’s ability to address distribution infrastructure needs, which is leading to the implementation of load reduction.
Load reduction is only implemented in areas when the demand is ‘higher than the infrastructure can handle’.
‘When that distribution infrastructure fails to provide electricity to 50 houses, there’ll be 10 to 20 houses that have been paying diligently, but they are collateral damage,’ said Ramokgopa.
‘We must protect the interests of Eskom as a going concern and ensure that municipalities can collect revenue […] The biggest victims of all of that is the end consumer and, by definition, is the South African economy,’ Ramokgopa added.
The department, together with municipal leaders, will address the challenge of electricity affordability and access for municipalities to collect revenue, according to Ramokgopa.
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Picture: Jeffrey Abrahams / Gallo Images