S.Africa’s power utility debt climbs despite bailouts

South Africa’s battered and debt-ridden state power company Eskom forecast Thursday a hefty annual loss and a rise in its huge debt despite several government bailouts.

Eskom said it expects overall debt to rise to the equivalent of $30.8 billion in the fiscal year that ends on March 31, 2020 from $30 billion a year earlier despite multiple bailouts from the government.

It also forecast a net loss of 20 billion rand ($1.35 billion) loss for the year, despite posting a first-half profit of 1.3 billion rand, partly owing to lower demand for electricity in the southern hemisphere’s summer months.

Eskom said sales of electricity had slipped by 1.28 percent in the first half of its fiscal year, compared with the same period one year earlier.

Full year results are to be released in July 2020, the company said.

Meanwhile, the South African government plans to inject 128 billion rand into Eskom over a three-year period that began in February 2019.

But the company pointed to high coal costs and unpaid electric bills by municipalities and individuals as persistent hurdles to improved finances.

Eskom generates around 95 percent of South Africa’s electricity, mostly with coal-powered generating plants.

Pressure has been piling on President Cyril Ramaphosa’s administration, which won elections in May with a pledge to clean up loss-making state-owned entities like Eskom.

The utility company has been damaged by years of corruption, mismanagement and over-spending.

Many of its plants are old and poorly maintained, and result in regular power shortages that hamper growth in Africa’s biggest economy.

The IMF warned South Africa on Monday that continued bailouts to state-owned entities was not sustainable, and called for urgent reform.