Eskom grid expansion to cost taxpayers hundreds of billions

Expanding the capacity of South Africa’s electricity grid will cost the country hundreds of billions of rands over the next five years, with Eskom estimating it will need R100 billion for grid expansion in the next financial year. 

Professor Hartmut Winkler told SABC that Eskom’s balance sheet is simply not strong enough to fund the expansion of the grid, forcing it to request more money from the government or leave it to the private sector. 

Eskom has said it will need an additional R100 billion in the 2025 financial year. This amount will increase annually to R170 billion in 2029. 

The utility’s Transmission Development Plan for the period from 2021 to 2029 was initially expected to require R372 billion. 

However, this amount has increased substantially as the private sector has begun rolling out large-scale renewable energy projects in areas with little to no grid capacity. 

Eskom’s balance sheet, loaded with over R400 billion of debt, is not strong enough to fund the expansion of South Africa’s grid. It will require more money from the government or from the private sector. 

The New Development Bank formed by the BRICS bloc of nations called on Eskom to upgrade its grid to ensure the projects it has funded can come online. 

The Bank has recognised that it will have to deploy capital to fund the upgrading of the grid and is willing to give loans to state-owned enterprises involved in expanding the grid.

“We need to put more resources into upgrading the grid,” vice-president Leslie Maasdorp said. “It is an area we hope to play a bigger role in.”

The government has nearly completed the creation of a separate transmission company to manage the country’s grid called the National Transmission Company of South Africa.

It is hoped that with a fresh balance sheet, this company will be able to raise debt to fund the expansion of the grid.

During an update on the implementation of the Energy Action Plan, Electricity Minister Kgosientsho Ramokgopa outlined how much would have to be spent on upgrading Eskom’s grid. 

Source: SABC/Ministry in the Presidency for Electricity


Top JSE indices