S. African president appoints task team to stabilize electricity utility

Source: Xinhua| 2018-12-15 02:16:48|Editor: Mu Xuequan
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CAPE TOWN, Dec. 14 (Xinhua) -- South African President Cyril Ramaphosa on Friday appointed a task team to stabilize electricity utility Eskom which is blamed for worsening power shortage that has gripped the country for more than a month.

The Eskom Sustainability Task Team will advise the government on actions to resolve the utility's operational, structural and financial challenges, Ramaphosa said.

The task team comprises individuals with extensive electricity, management and economic expertise, he said.

It will, among others, assess how the structure of the electricity industry in South Africa can adapt to evolving changes in this sector, including the harnessing of new technologies, and make proposals to resolve Eskom's debt burden, according to the president.

The assessments that will be carried out by the task team arise from the government's concern that the lack of adequate electricity has a negative impact on economic recovery, Ramaphosa said.

He stressed the need for intervention in the short and medium terms to restore the supply-demand balance.

Eskom, which provides more than 95 percent of the electricity consumed in South Africa, has implemented rolling blackouts since November, seriously affecting economic activities and people's lives.

There have been conflicting reports surrounding the current crisis -- ranging from state capture and a lack of coal to allegations of irregular tenders and Eskom's use of companies that are unable to provide the services Eskom so desperately needs.

Eskom has been accused of signing behind-the-door tender agreements with companies linked with the controversial Indian Gupta family which allegedly colluded with senior government officials in looting from state-owned enterprises, known as state capture.

The Gupta-linked companies are blamed for the shortage of coal which Eskom heavily relies on for power generation.

The current crisis is coupled with severe financial constraints at Eskom, which impact on the fiscus, and where operational and financial issues have become inter-related and need to be addressed simultaneously, Ramaphosa said on Friday.

Appreciating the urgency of the matter, the president requested the task team to submit initial recommendations by the end of January 2019.

Eskom is burdened by a debt of between 250 million and 475 million rand (between 17 million and 33 million U.S. dollars), according to Ramaphosa.

The parastatal reportedly wants to transfer a large section of its debt to the government.

On Friday, international rating agency Moody's criticized Eskom's attempt to transfer its debt to the government, saying this will place a heavy burden on the state.

The debt transfer will increase the government's debt levels by around two percentage points, according to Moody's.

The decision to transfer Eskom's debt comes with a "moral hazard," Moody's said.

Moody's and other international rating agencies have warned that Eskom is a risk to the health of South Africa's economy.