South Africa’s cash-strapped power utility Eskom has enough cash to pay wages and keep operations going for a few months and does not plan to retrench any workers despite a liquidity crunch, its spokesman said on Tuesday.
Eskom is in the midst of a leadership crisis and has been at the heart of allegations of illegal contracts and undue influence in awarding tenders to the Gupta family, friends of President Jacob Zuma.
Zuma and the Guptas have denied any wrongdoing.
“The finance division has indicated there isn’t any hindrance in our ability to make those payments (wages),” Khulu Phasiwe, spokesman for the country’s sole power supplier said.
“This is why we’ve been negating these reports that we only have R1.2 billion ($83.5 million) in our coffers. Although we have not met our target of R20 billion in terms of reserves, we still have enough cash to keep us going for a few more months,” he said without giving a time-frame.
Phasiwe said the utility would step-up power interruptions and cut-offs to municipal authorities and households with outstanding debts, which had risen by R4 billion to R11.2 billion since the start of its financial year in April.
“If we are able to retrieve this R11.2 billion it will obviously help us continue operations,” Phasiwe said.
Phasiwe said the utility would draw down on the current loan facilities they had, including a R350 billion guarantee from government, and selling more electricity to neighbouring countries in order to plug the revenue gap.
Eskom’s acting chief executive Sean Maritz said on Monday the utility had enough cash to meet it commitments.
Eskom’s expects its debt to peak at R500 billion in 2021, up from R350 billion currently.
Credit ratings agencies say state firms such as Eskom and loss-making South African Airways should be reformed and cite the cost of propping them up as a threat to the rating of Africa’s most industrialized economy, which S&P Global Ratings and Fitch have downgraded to “junk”.
($1 = R14.37)