Government announces package to close Eskom funding gap
14 Sep 2014
At a special meeting in Cape Town on Thursday, Cabinet approved a package to support a strong and sustainable Eskom to ensure that the energy security of the country is maintained, as well as supporting gross domestic products (GDP) growth. This package was based on recommendations from an Inter-Ministerial Committee which reviewed an extensive set of options available to ensure energy security.
Eskom is facing significant challenges that threaten its sustainability. These include a funding gap that requires closing to ensure security of supply. The main contributors to this gap include the fact that Eskom will not be generating enough revenues to cover the costs of electricity supply.
Further, Eskom has been incurring additional costs to keep the lights on by running the more expensive power plants (open cycle gas turbines) excessively due to a deterioration of performance of some of its coal plants and delays in the build program.
As a result, a package of solutions is required, to ensure a sustainable electricity supply industry, which focuses both on improving efficiency of operations, as well as funding.