Founder: Turnaround Talk
For a long time, it seemed as if Eskom could do no wrong. Despite stern warnings from Government that it would not be bankrolling any bailouts of struggling SOEs, the ailing utility kept going to Government – with hat in hand – and Government paid the piper (so to speak).
However, 2023 saw a significant change in the narrative. In the midst of the country’s worst energy crisis on record, Government once again gave Eskom the money that it asked for.
However, it came at a significant cost. The utility must get used to the fact that independent power producers will play an increased role in the country’s energy mix. Government informed Eskom that it will relinquish control of some power stations to private owners in the future. And Eskom has been warned that it will toe the Government line more stringently in the future.
Will Government turn the tide?
According to an article by EWN, National Treasury’s head of assets, Duncan Pieterse, said that through stringent pre-financing conditions, government hoped to turn the tide on not reaping any benefit of financing state-owned companies.
The National Treasury said that it would not just be doling out money to Eskom, despite a R254 billion bailout announced in this year’s budget speech.
The article adds that bailouts to Eskom account for more than half of the money allocated to SOEs over the last 10 years and it’s responsible for more than 85% of loan guarantees.
Scopa briefed
Treasury briefed Parliament’s Standing Committee on Public Accounts (Scopa) on 14 March on the status of bailouts and loan guarantees to mostly struggling state-owned enterprises.
The EWN article points out that bailouts of over R330 billion have been paid to struggling SOEs over the last 10 years.
National Treasury’s head of assets, Duncan Pieterse, said that through stringent pre-financing conditions, government hoped to turn the tide on not reaping any benefit of financing state-owned companies.
“It’s clear that the bailouts that we’ve given Eskom up until now have not managed to address the entity’s underlying liquidity and solvency challenges.”
Image By: Steve Buissinne from Pixabay
The debt dragon
The EWN article added that Pieterse said that this was because Eskom’s debt had continued to grow and operational challenges had not been resolved.
“We have instituted a provision that Eskom is no longer allowed to borrow for the debt relief period, so we can deal with the debt that continues to be a problem.”
Another bailout condition includes an independent operational assessment, that will be led by an international technical association of energy plant operators, VGBE.
Decreased productivity
In our continued coverage on the economic impact of loadshedding, an EWN article points out that employers have noticed decreased productivity as a result of loadshedding.
The article points out that an online survey has found that 45% of employers who participated noticed a decrease in work productivity due to load shedding.
The South African blackout survey was conducted last month, collecting data from about 1,500 respondents on the adverse effects and costs of the rolling power cuts.
The article adds that 72% of the respondents said that the power cuts had negatively affected their work life, with businesses incurring damage to equipment, which has been so costly.
They have also had to downsize workforces or close down completely.
The survey highlighted that over 1 900 hours of power cuts were recorded last year.
The article points out that the Brandmapp WhyFive survey, conducted last month, accumulated responses from mid-market households earning above R10 000 a month.
The study picked up that among the almost 1 500 participants, over 70% of them felt their personal safety, household costs and work productivity had been impacted directly by the high stages of load shedding.
The article points out that the study also noted that worker confidence and mood had taken a negative swing due to load shedding causing significant material effects on various businesses, like loss of revenue, downsizing or salary reductions.
As Eskom flickers between stage 4 and 5, and their leadership stays in question, the survey concluded that taxpayers’ productivity and resilience were set for a decline.
Image By: Steve Buissinne from Pixabay
Shaping the national debate
Over the past two years, there have been increased calls for a change in Government as the African National Congress continues to struggle to find a solution to deal with the country’s challenges. It is safe to say that the calls for a regime change have never been this strong since the dawn of democracy in 1994.
The energy crisis is fast becoming the proverbial line in the sand for many South Africans. While the energy crisis will mean that many companies will be facing financial distress, which means more work for BRPs and liquidators, many professionals will rather help companies increase their profitability than fight for survival from the trenches.
South Africans are frustrated, but it is this frustration that is shaping the national debate.
