Eskom to sell some of its non-core assets to reduce R450 billion debt

CEO Andre de Ruyter says the debt has been identified as government's biggest liability.

Eskom CEO Andre de Ruyter has announced that the power utility will be selling some of its insurance and finance non-core assets in a bid to raise capital and reduce its R450 billion debt that has been identified as the government’s biggest contingent liability. 

He said that Eskom is currently unable to service the debt from its balance sheet as sales volumes have declined at least 1 percent a year against a 30 percent increase in operating expenditure in five years to reach R151 billion, forcing it to borrow more money.

“It’s an opportunity for us to also understand how we can save by diversifying and potentially exiting from that business,” Andre said. “We also have a finance corporation and this business is in a process of being sold. We are waiting for bids from a number of interested parties. To the extent that we receive any monies from the disposal of non-core assets, the proceeds will primarily be applied to the reduction in debt.”
According to Andre, Eskom’s current financial modelling showed that the utility could achieve independent financial sustainability at a reduced debt balance of R200 billion, a closing cash balance of R30 billion and Ebitda margin of 35 percent.