Eskom: Kusile and Medupi project should be put on ice, as we cannot afford it now
This past week, a Meridian Economics Report on Eskom highlighted some possible answers to the financial distress the power utility is currently facing. The report suggested that Eskom postpones the build programme on a number of units at the Kusile and Medupi Power Stations.
These recommendations come after Eskom presented to its major shareholder, Government, that it is expected to run at a loss of R3.5 billion by the end of March next year. Worse, Eskom only has R1.2 billion left in its cash reserves until the end of November 2017, when it should have R20 billion.
Eskom has unsurprisingly rejected these proposals citing possible exposure to contractual penalties. Eskom’s excuses are frankly weak and nonsensical given the fact that it cannot afford these projects.
With a sluggish economy, falling sales and a surplus in electricity generation, it’s safe to say that Eskom is facing financial ruin. Slamming the brakes on the Kusile and Medupi projects could go a long way in cutting much-needed costs at Eskom.
These are vital strategies that need urgent, robust debate and dialogue to prevent Eskom from crying out for a bailout next year and prevent another tariff hike.