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Ramaphosa says Eskom’s financial position ‘remains untenable’

Urges non-paying citizens to settle their debts.

President Cyril Ramaphosa said that the state-owned power utility’s financial position “remains untenable” and urged non-paying citizens to change a culture of non-payment and settle the “huge amounts” owned to the cash-strapped producer.

Read: Eskom wants government to take over majority of its debt

Eskom, which supplies about 95% of the country’s power and is seen as the biggest risk to the economy, has R450 billion of debt and is surviving on state bailouts after massive cost overruns at two partially completed coal-fired power plants. Citizens endured four days of controlled blackouts last week to prevent the total collapse of the grid. Power shortages and policy uncertainty have damped economic growth and plunged business confidence to multi-decade lows.

“The sheer scale of Eskom’s debt is daunting,” Ramaphosa said in a statement Monday. “Further bailouts are putting pressure on an already constrained fiscus.” South Africa will “soon” announce the appointment of a permanent chief executive officer for the utility and “shortly” release a special paper on the path the CEO and a strengthened board should take, he said.

Eskom is owed R23.5 billion by defaulting municipalities, a figure that keeps increasing, and “huge amounts” of money by individual users, Ramaphosa said. By the end of March, the Soweto area in southwestern Johannesburg owed R18 billion alone, Eskom said in July.

“This is the time for a frank discussion on the payment of owed money to Eskom by individual users,” he said. “Boycotting payment for services had a place in apartheid South Africa. It was an effective tool to mobilise communities against an unjust system. But it has no place in present-day South Africa. If public utilities like Eskom are to survive, then all users need to pay for the services they receive.”

Last week, the government published its latest Integrated Resource Plan, which maps out the energy mix for the next decade. It includes a switch to more green energy as the country, which sources most of its electricity from coal, faces pressure to meet emissions-reduction targets.

Read: Eskom wants government to take over majority of its debt

South Africa will develop a framework to take ageing coal-fired plants out of service, Ramaphosa said. While this will present challenges for communities and workers where fossil fuel-powered energy generation takes place, “it also presents opportunities for those affected to have access to technologies that are more cost-effective and better for human health.”

© 2019 Bloomberg L.P.

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Hey Ruling Party, not too long ago you encouraged civil disobedience for supporters not pay for utility services. This culture has now entrenched itself with obvious consequences. Now you encourage exactly the opposite whilst at the same time doing absolutely nothing about those entities that fail to pay.
Seems to be a bit of a skewed “stick and carrot” approach?

Agree. ANC living in a fool’s paradise if they think they can reverse the culture of “Freedom before education”, ” rolling mass action” , ” non-payment for services ” etc. I want and I want it all for free. Hallo, Mr President, you were/are part of the culture in my book
Good luck to all of us

This all sounds good in theory, but unfortunately the expectation that services such as water ,electricity, TV, should be freely available,is well established. I just wonder how this will be reversed, without mass resistance. The countries leaders in parliament have set a bad example which can and will be used as an excuse for non payment.

Even if the household pay their debt, it would be a futile exercise. Eskom is ANC’s looting machine Number 1.

Boycotting payment for services had a place in Apartheid South Africa. It was an effective tool to mobilize communities against an unjust system. The words of Ramaphosa. Show us how you turn this one around in the new just system.

Question 1: If the non paying people, both private individuals and business can pay their bills will the government reduce by half the bills of the paying citizens because we are carrying those who never pay or else Eskom would not be functional without the paying minority.

Question 2: Why does the government not lead by example and pay all its debt to the businesses that rendered services to its many entities and departments without payment over the years?

Solution: If our government can satisfy the above two scenarios then all citizens will surely support a notion that if there is default and no cooperation, then no social grants will be given to the citizens on social grant

Think about this: Eskom has effectively locked South Africa into a cycle of poverty and low growth for the next few years, maybe as many as 8 years. Economic growth requires stable and cheap energy. We have neither from Eskom. Either we replace Eskom or we fix Eskom. Neither is going to happen quickly. Eskom cannot supply the needs of a dead growth economy. There is no way it will cope with an economy that grows.

All the money in the world won’t fix our problems. Just look at Equatorial Guinea, a small population of ±1 million people in an oil-rich country with the highest per capita income in Africa. Equatorial Guinea previously ranked as the third largest producer of oil in Sub-Saharan Africa at 376,000 barrels per day. However, roughly 50% of
the population lacks access to potable water. In 2012, about 40% of 6 to 12-year olds did not even attend school. Only 25% of new-borns were immunized for polio and measles and 33% for tuberculosis. This ranks amongst the lowest rates in the world. Life expectancy and infant mortality are below the sub-Saharan African average. By contrast, the ruling elite (including a president who has been in power for 40 years) have accumulated vast personal fortunes and spend their time on overseas spending sprees on luxury items. That is the “African way”.All the money in the world won’t solve Africa’s problems. Equatorial Guinea’s oil wealth couldn’t even pull 1 million people out of poverty. Only a change in mind-set will solve it. Accept it, the “African way” doesn’t work. Africa’s people suffer because their leaders simply don’t care for them.

Ramaphosa urges non-paying citizens to settle debt but the citizens never urge the non-performing politicians to deliver on the promises they make.

Maybe I should go mime bitcoin in soweto. Few asic machines on free electricity, could be very profitable.

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