South African power utility Eskom told parliament on Wednesday that it was not near bankruptcy and would cooperate with ratings agencies to avoid downgrades.
Eskom is battling to keep the lights on in Africa’s most advanced economy and faces a serious liquidity crunch. It has had to frequently resort to controlled power cuts to prevent the grid from being overwhelmed.
The utility’s funding gap to 2018 is estimated at 200 billion rand and it is getting a 23 billion rand ($2 billion) cash injection from the government this year.
“From a cash position Eskom has got a substantial amount of facilities that have been negotiated but not drawn down,” said the newly-appointed acting Chief Executive Brian Molefe.
“In addition, the Treasury has made a commitment to give Eskom about 23 billion (rand) which I believe will be given in two tranches during this financial year,” said Molefe, who was appointed to his role on Friday.
“We do not think that Eskom is about to be declared bankrupt or insolvent,” Molefe said of the struggling utility.
Standard & Poor’s in March cut its credit ratings for South Africa’s Eskom to junk following the suspension of the utility’s CEO and three other senior executives.
“We will be engaging with rating agencies to find out what it is they would like to see for Eskom to be re-rated investment grade and we will do everything that they say we should do to bring it back,” Molefe said.
Eskom executives also told parliament the utility had a maintenance backlog and required a minimum of between 3,000 megawatts of electricity to a maximum of 5,000 MW to carry out the repairs in order to avoid further power cuts.
Last week Eskom suffered its worst power shortage in years after losing a quarter of its supply due to unplanned outages in addition to scheduled maintenance.