• Eskom problems worsen as company tries to find a way out of debt trap

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      Patrick Lavery

      Combustion Industry News Editor

The problems at South African state-owned power utility Eskom are continuing, with electricity being rationed and the company struggling painfully to find finance. Eskom’s total debt is reportedly around US$30 billion (€26.4 billion), ten times higher than in 2007, and equivalent to 17% of the country’s total national borrowing. Corruption issues, workers’ strikes, blackouts, and stagnating sales are contributing to the financial crisis, to the point where Eskom’s cashflow is now only 59% of its debt servicing costs. Cutting the workforce by a third at the same time as transferring around US$7 billion of its debt to the government are the means by which the company sees a way out of its mess, but neither will be politically palatable for the government. A joke is doing the rounds in South Africa, as the Reuter’s report conveys: “What did South Africans use for lighting before candles?” Answer: “Electricity.”