JOHANNESBURG (Reuters) – South Africa’s government is discussing restructuring the debt of ailing power utility Eskom but will only give details of what it plans to do next year, Public Enterprises Minister Pravin Gordhan said on Thursday.
The cash-strapped firm said this week it wants the government to take on 100 billion rand of its debts, about a quarter of its total borrowings. It is also eyeing a steep hike in tariffs in 2019 from the energy regulator.
“That’s an issue that is being discussed in government and some time in the New Year government as a whole will give you some idea of where we are going,” Gordhan told reporters referring to the firm’s debt of over 400 billion rand ($28 billion).
The idea of moving Eskom’s debt on to government’s balance sheet has unnerved investors as it puts even more pressure on South Africa’s sovereign credit ratings, already rated subinvestment by two of the top three agencies.
“It’s work in progress. We’re dealing with 400 billion rand of debt and its not something you can deal with easily, Gordhan said. “You can’t deal with just the debt issue without looking at the organizational way forward as well.”
Gordhan said there was “no possibility of haircuts on Eskom debt.
“What we are talking about is how do we address our responsibility to pay back the money that has been borrowed … and provide the confidence that will be done,” said Gordhan.
Africa’s biggest economy has experienced a week of nationwide power outages, which Eskom has blamed on low coal supplies as well as maintenance to its aging fleet of stations.
(Reporting by Alexander Winning; Writing by Mfuneko Toyana; Editing by James Macharia)