'I think Moody's will be happy' - Ramaphosa says plan to deal with Eskom debt imminent

2019-10-14 11:28 - Lameez Omarjee
South African President Cyril Ramaphosa arrives to
South African President Cyril Ramaphosa (NASIEF MANIE/AFP/Getty Images) ~ Getty Images

Government will soon make an announcement on dealing with debt at power utility Eskom, President Cyril Ramaphosa said.

The president on Monday delivered the opening address at the Financial Times Africa Summit in London. The summit is a gathering of investors, business people and decision makers. During a question and answer session following his address, Ramaphosa shed light on the crisis at the debt-ridden power utility.

Responding to a question about government's plans to reassure ratings agency Moody's about reforming Eskom, ahead of its verdict on the country's credit rating in November, Ramaphosa acknowledged that Eskom is "dogged" by "huge debt". Eskom's debt levels surpass R450bn.

"We will make announcements on how to deal with debt in the next few days. We hope Moody's will take note," Ramaphosa said. Government is working on "innovative ideas" to deal with Eskom debt, he added. Ramaphosa said the collection of tariffs had weakened over time, but new strategies and programmes are being developed to deal with tariff collections, he explained.

Announcements on executive appointments at Eskom, including that of chief executive officer will also be made soon, and the board will be "strengthened", Ramaphosa confirmed.

"I think Moody's and others will be happy with the announcements made," Ramaphosa said.

He also commented that announcements will be made on the energy strategy. "We will deal with that and provide a clearer picture of how to move forward with energy," he said as he explained there is global pressure on countries which traditionally rely on coal-fired power stations for energy.

Bloomberg recently reported that government is considering a R160bn green fund to decommission coal-fired power stations and push renewable energy solutions.

During his address he lamented that the power utility was struggling with liquidity problems and operational challenges. But there is a process in place to strengthen governance at Eskom, improve debt collection and increase energy availability and plant performance.

He said the planned unbundling of Eskom into three entities - generation, transmission and distribution- is similar to what other countries have done.

Private partnerships with SAA

The president also commented on moves at the national carrier, SAA. "SAA is one of those SOEs (state-owned enterprises) that has relied on lots of bailouts," Ramaphosa told the summit. He confirmed that government is open to private sector participation at SOEs, like SAA. "At SAA we are open to a strategic equity partner," he added.