JOHANNESBURG, South Africa’s State-owned power utility Eskom says its finances have deteriorated further to a point where it now describes its situation as dire.

The parastatal, which is struggling to raise money in capital markets, is currently 23 billion Rand (about 1.864 billion US dollars) in the red.

In recent years, Eskom has become synonymous with corruption allegations and boardroom dramas. This has now landed the State-owned company in deep financial trouble.

Eskom needs to raise 60 billion Rand per annum in order to complete the construction of its Medupi and Kusile power stations in five years’ time. It has managed to raise about half of that amount for this year. Securing the rest of the money is proving to be difficult and to make matters worse, money generated from the sale of electricity continues to dwindle amidst the current weak economy.

The decision by the National Energy Regulator of South Africa (NERSA) to deny it a 20 per cent electricity tariff hike which it wanted for this year and instead allowing it only a 5.0 per cent increase will make another 30-billion-Rand hole in Eskom’s finances.

It is not ruling out retrenchments. Unions say they are gravely concerned about the situation at Eskom. However, they are reluctant to talk openly ahead of the start of wage negotiations in April.

Lately, the government is not in the mood of dishing out bailouts to parastatals due to its own financial constraints arising from dwindling tax revenue. What the future holds for Eskom this year is a big unknown.