Eskom is a hot mess and wants households and businesses to raise R762 billion, including from higher power prices, and to claw back almost R22 billion in revenue caused by declining power sales.
From government it wants R100 billion.
And from the public and businesses it wants a 15% hike in power prices for the next three years – all after forecasting a record loss of R15 billion for the year ending in March this year.
This is clearly out of kilter with reality – an economy experiencing stagnant growth and high unemployment.
The country cannot just absorb the shock of such a big increase in power prices.
Two of three credit rating agencies rate the government’s credit worthiness at “junk” status and we can’t afford Moody’s Investors Service to downgrade its investment grade rating to junk, too.
It is vital that Eskom returns to being a well-run and managed state-owned company that executes major projects effectively, corruption is routed out, costs are contained – or even drop – and power cuts are avoided.
The power utility has a bloated staff complement, employing about 48 000 people at a massive cost.
But its power-generation capacity has increased only marginally.
In 2007 it employed 32 000. This bill needs to be cut.
In addition, effort needs to be put into recovering money from municipalities that don’t pay for power.
The amount owed continues to escalate sharply and stands at about R17 billion.
These massive applications by Eskom for such huge amounts of funding need to be solved in another way other than to push up power prices drastically or to call on the government for a record bailout.
What is patently clear, is that Eskom’s call for R884 billion is really a clarion call.
The power utility must be fixed.