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Image: Waldo Swiegers, Bloomberg

Eskom CEO appoints board for planned division into three units

Eskom seeks to drive harder bargain on funding costs-CEO

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Eskom’s new CEO said on Friday he was in the process of appointing boards for the planned break-up of South Africa‘s state power utility into separate units for generation, transmission and distribution.

Eskom produces more than 90% of South Africa‘s electricity, but its ailing fleet of coal-fired plants have struggled to keep up with demand, leading to periodic crippling power shortages.

CEO Andre de Ruyter warned of a higher probability in the medium term of scheduled power cuts, or ‘loadshedding’ as they are called in South Africa, as Eskom gets on with badly-needed maintenance.

“We will unfortunately have to expect some increase in loadshedding. We will have to give ourselves the space to fix what needs to be fixed,” he said.

“If we don’t implement this maintenance plan there is a very real risk that the deterioration in our systems will continue.”

He added that the company was seeking to refinance its debts – currently estimated at R450 billion. The interest charges on its balance sheet could rise because of this, he said.

President Cyril Ramaphosa announced last year that Eskom would be split up in order to open up the power sector to more competition.

But on Sunday de Ruyter said such a plan should not be rushed, owing to the risks entailed, which included problems transferring assets against which creditors had loaned Eskom money. He said rushing the split could further destabilise South Africa‘s power supply.

Eskom is in discussions with Treasury and advisors to drive a harder bargain with creditors over its debt financing costs, new chief executive Andre de Ruyter said on Friday.

“There’s an opportunity for us from an Eskom treasury perspective… to rather frankly drive a harder bargain with our creditors,” said de Ruyter. 

Eskom resumed power cuts on Thursday evening, cutting up to 2 000 megawatts from the grid as it struggled to replace the emergency capacity it used this week.