No long-term plan for Eskom debt

Eskom CEO Brian Dames said the company only had a two-year plan to deal with debt problems.

FILE: Eskom chief executive Brian Dames visits the Medupi Power Station near Lephalale in Limpopo on 11 April 2013. Picture: Werner Beukes/SAPA

JOHANNESBURG - Eskom has a two-year plan to deal with its debt crisis, CEO Brian Dames said on Wednesday.

Speaking to 567 CapeTalk/Talk Radio 702's Bruce Whitfield, he said the power utility was struggling to pay off debt because it was not able to charge the prices it should be.

Dames said the costs of supplying smaller customers, such as households, are far higher than what the consumer is actually charged.

"You're certainly not paying what it costs us to get the electricity to you," he said, referring to average consumer.

The CEO explained that larger consumers covered those costs.

"A lot of that [the shortfall] is being subsidised through the larger customers."

The electricity supplier's debt amounts to R225 billion.

Company results released on Wednesday showed Eskom was still achieving profits, even though it was lower than in 2012.

The results further revealed an increase in revenue from the R115 billion in 2012 to nearly R130 billion in 2013.

Profits dropped by R8 billion in the same period to R5.2 billion.

TWO-YEAR PLAN

When asked whether the outlook for the company was as grim as it appeared, considering the inability to charge smaller customers the full cost coupled by the eight percent increase imposed by regulators, Dames conceded that "something has to give".

He admitted the company only had a short-term plan to deal with the problem.

"We have a plan only for two years as to how we can navigate [these issues]."

Dames said R34 billion of the total debt would have to be paid over the next two years, which would be "tough".

He said they would have to do "a heck of a lot more" to deal with just that part of the debt.

In relation to the remaining debt, the CEO said, "We have got no answers yet for how we'll deal with [it]."