South Africa May Consider Breaking Up Eskom To Make It Financially Viable

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The South African government may consider breaking up state energy group Eskom to make it financially viable.

Reuters reported on Tuesday that government will soon debate whether to split up state power firm Eskom.

Public Enterprises Minister Pravin Gordhan told Reuters on Tuesday that Eskom’s fate will be debated at a cabinet meeting starting on Wednesday.

“Should Eskom be unbundled into generation, transmission and distribution, as is the worldwide practice? That is a debate we are going to have soon. And it is going to go beyond a debate because we need very fast movement,” Gordhan said at a business conference outside Johannesburg.

Rising municipal debt, coupled with Eskom’s poor financial and operational performance pose a systemic risk to the sustainability of the company, Eskom’s Chief Financial Officer, Calib Cassim, said recently.

Cassim said the ballooning municipal debt, together with the rising Soweto debt, are no longer just an Eskom problem alone – hence the involvement of the inter-ministerial task team that includes, amongst others, the departments of Co-operative Governance and Traditional Affairs, Energy, Public Enterprises, National Treasury, and energy regulator Nersa.
He said the Eskom Board has assessed the ability of the group to continue as a going concern, and considered a number of mitigating strategies and actions to address the risks identified.
“What is clear is that Eskom cannot solve financial and operational sustainability challenges that it faces alone. The turnaround of Eskom is a journey over time that is highly dependent on the active involvement of the shareholder, Nersa and other stakeholders including customers,” said Cassim.

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