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Eskom needs debt relief in combination with tariff increases to survive, said outgoing CEO André de Ruyter, who has led the utility for three years as South Africa’s power outages have intensified.
The continent’s most-industrialised nation has had 100 straight days of electricity cuts because of supply shortages largely caused by unreliable coal-fired power plants. Fixing the energy crisis that’s crimping the economy has become a central focus for President Cyril Ramaphosa’s government.
Financial constraints at Eskom, which has R396 billion of debt, combined with breakdowns, theft and sabotage at its plants have caused the utility to impose blackouts for about 15 years, but the outages have progressively worsened in the past five months with Ramaphosa’s administration scrambling to find a way out of the crisis.
The blackouts, known locally as load shedding, are costing South Africa’s economy as much as R899 million a day, according to the central bank.
"We need cost-reflective tariffs," De Ruyter said in an interview with Bloomberg TV. "If debt relief isn’t backed by tariff increases, we will be back to the National Treasury with a begging bowl in five years."