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Eskom want more money but could put SA at risk of a downgrade

Eskom will announce its annual financial results this week as well as challenging the National Energy Regulator (Nersa) in court over the awarded tariff increase which it says is not enough.

If it had not been for the R130-billion bailout the power utility would not have been able to sign off its accounts due to doubts regarding its financial status.

Nersa granted Eskom a price increase of 9.4% in April which the power utility says is too low as they originally requested a 17% tariff increase.

The power utilitys debt is more than R450-billion which is why they are requesting the High Court to review the increase.

The Minerals Council said in March that due to the additional electricity tariffs over the next three years and the financial burden of carbon tax, around a quarter of South Africa’s mining jobs would be lost.

According to a senior treasury official, other than the cash injection from government, they are also looking at swapping Eskom’s debt for government bonds or ring-fencing it into a separate account.

Eskoms financial results will show the extent of the crisis they are experiencing and how much of a risk it will put the country in of a downgrade.