Eskom’s R150 billion cash-reserves claim is wishful thinking

23 September 2016

The claim by Head of Generation for Eskom, Mr Matshela Koko, that Eskom could pay for the nuclear build programme by using cash-reserves, which he indicated could be R150 billion in 10 years’ time, is wishful thinking.  

Eskom recorded a R4.6 billion profit in the 2015/16 financial year, a far cry from the R15 billion in profits it would need to generate consistently for the next 10 years to make up R150 billion.

Considering that by Eskom's admission electricity demand is down, coupled with economic growth projected at a mere 0.6%, this raises serious questions about the assumptions underlying their projections.

I will therefore be submitting parliamentary questions to Eskom to find out how they intend to generate these massive cash reserves. 

The validity of their projections notwithstanding, spending any cash reserves on a nuclear build program would be financially irresponsible.

Eskom currently owes its creditors R322 billion underwritten by R350 billion in government guarantees. The entity should rather use excess cash reserves to decrease these liabilities.

Moreover, the fact that Eskom believe they can generate these massive profits whilst pushing for well-above inflation tariff increases on electricity, should be a slap in the face of the majority of poor citizens in our country. Energy and electricity costs are eating into their limited budget and now with these tariff increases, their pockets will be hurting even more.

The big question is why Eskom needs to be building nuclear in the first place when future electricity shortages would be better addressed by cheaper and more sustainable renewable and gas projects. With advancements in storage and battery technologies, these would be the better alternative by 2035. 

The Minister is the only person with the prerogative to choose nuclear over any other form of energy, in this vein Mr Koko is overstepping his fiduciary duties to even suggest that Eskom would be investing in Nuclear.

In the context of its massive debt, and repeated requests for above inflation tariff increases, it is irrational to utilise any cash reserves in pursuit of the much maligned nuclear “wonder” programme and once again calls the motivation for the nuke deal into question.

Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 23 September 2016