By Alexander Winning

JOHANNESBURG (Reuters) – The chief executive of South Africa’s Eskom said on Thursday the state utility needed to more than halve its debt to 200 billion rand ($11.2 billion) to become financially sustainable and put an end to recurring government bailouts.

But Andre de Ruyter, who took the reins at the struggling power firm five months ago, told Reuters in an interview following a conference call with reporters that he wasn’t planning restructuring talks with bondholders.

Instead Eskom would seek to “opportunistically” lower borrowing costs when its current debt matures and explore “green financing” options as it retires some of its older coal-fired power stations, he said.

Eskom has been mired in financial crisis for years, as it doesn’t generate enough earnings to meet its debt costs.

Its 450 billion rand of debt, of which 150 billion is owed to development finance institutions (DFIs) and 240 billion in domestic and foreign bonds, is equivalent to more than 8% of South Africa’s gross domestic product.

It battles to keep the lights on because of faults at its coal fleet, a factor that helped push the country into recession even before the coronavirus crisis struck.

De Ruyter said the 200 billion debt target was a long-term goal but was central to efforts to rescue the century-old company, which produces more than 90% of the power in Africa’s most industrialised economy.

He said there was “significant appetite” from DFIs to support lowering emissions through discounted financing and that he would speak to Italy’s Enel about its experience of issuing green bonds.

The former Nampak executive said Eskom would start a “renegotiation process” with independent power producers to try to lower electricity costs for consumers.

Eskom’s problems are among the biggest challenges for President Cyril Ramaphosa, who has been trying to rebuild investor confidence after a decade of scandals and policy missteps under his predecessor, Jacob Zuma.

($1 = 17.9446 rand)

(Editing by Olivia Kumwenda-Mtambo, Edmund Blair, Jason Neely and Emelia Sithole-Matarise)