Panel 5: The SOE Debt Crisis – What is to Be Done?

Summary: The extent of the financial losses experienced by many of South Africa’s state-owned companies (SOCs) are discussed in this commentary, along with an exploration of the factors that have led to the debt crises many find themselves in.  Three interrelated issues are highlighted, that are proposed to have contributed to the crises: economic slowdown related to the drop in mineral prices, the lack of early state intervention, and unrealistic business models.

Summary: Discussing state owned enterprise debt, specifically that of Eskom, this commentary explores how Eskom could reduce its debt load by half. The focus is on two different sets of considerations that should help inform which approach is best in dealing with Eskom’s debt. The first are technical considerations, those that are lowest cost and most feasible in line with debt market requirements. The second are policy considerations, those that best fit broader policy reform objectives such as the stabilisation of overall energy supply and reduction in carbon emissions.