NEWS
22/01/2018 17:12 SAST | Updated 22/01/2018 17:13 SAST

What Eskom Needs To Do Now To Survive

Energy expert Chris Yelland says the first priority will be for Eskom to restore confidence within the financial sector.

Mike Hutchings / Reuters

Deputy President Cyril Ramaphosa has made the first move in a bid to restore confidence in Eskom, but the parastatal has a long way to go in order to get back on its feet.

His office, in consultation with other ministers, cleared out almost the entire Eskom board, removing members like alleged state-capture facilitators Matshela Koko and Anoj Singh in the process.

Treasury blue-blood Phakamani Hadebe was appointed as interim CEO, and the well-respected chairperson of Business Leadership South Africa, Jabu Mabuza, will lead the board.

Speaking to HuffPost, energy expert Chris Yelland listed a number of steps the power utility must take in the near and distant future to accomplish a complete turnaround.

Yelland said the first priority will be for Eskom to restore confidence within the financial sector – by among other things, dealing with the immediate liquidity crisis it currently faces. He blamed the lack of confidence in the parastatal on issues of governance.

READ: Eskom Management Wants Ramaphosa To Intervene Now.

"Eskom has also not released its interim financial results as yet. There were questions raised by auditors about its status as a going concern. If Eskom lost its status as a going concern, lenders could call in their loans – which will be detrimental," he said.

"So the first step is to restore confidence, then check and release their financials to [prove] they are indeed a going concern. This must be done by the end of January."

Yelland than advised that the parastatal take decisive action against all members of its executive who are facing allegations of any sort – but warned that due to labour laws, fair process may protract that development.

READ: Gordhan's Fingerprints All Over Eskom Exorcism.

Next, "Eskom then needs to issue new bonds. Treasury previously indicated that Eskom would have to raise about R20-billion by the end of March. They would have to do this by issuing bonds and raising capital.

"[In the] long term, Eskom managers will have to think about restructuring its entire business model, to increase sales and equity while cutting costs. They may need to look at the option of registering on the stock exchange."

Attempts to contact Mabuza were unsuccessful. But in a recent statement, he said: "The stabilisation of Eskom is of critical importance, but it is not a task that should be taken lightly. However, I believe that with the right people and support structures in place, we will find credible solutions to the complex challenges that need to be addressed to achieve sustained financial stability at Eskom – and by extension, alleviate the swelling debt burden on the fiscus."