- South African Finance Minister Mr Tito Mboweni announced this morning in a parliamentary address that Eskom will be receiving a R59 billion bailout from government in two instalments: R26bn in the 2019/20 financial year followed by R33bn in the 2020/21 financial year.
- Mboweni also introduced the Special Appropriation Bill in the address to the National Assembly, which effectively allows for the two year financial lifeline. Read more
“I stated in my budget vote 7 for the National Treasury that Eskom presents the biggest risk to the fiscal framework because of its financial problems and negative impact on the economy,” Mboweni said.
“Given the high risks of a systemic failure if Eskom were to collapse, government is urgently working on stabilising the utility, while developing a broad strategy for its future. Eskom faces serious financial and operational challenges, which to a large extent were caused by the governance challenges that the entity previously experienced which resulted in a decline in investor confidence”, added Mboweni.
The minister also said the debt and restructuring of Eskom would need to be addressed. He will be appointing a chief restructuring officer, who “will be mandated to test these options with the ratings agencies to establish what impact each will have on the fiscus and recommend the appropriate one for implementation”.
Earlier this month it was revealed that Mboweni authorised a R17.6bn allocation to Eskom in April. The Finance Minister had to evoke a section of the Public Management Finance Act to authorise funding in emergency situations because the power utility faced difficulty in servicing its debts.
‘The R17.65bn allocation, which is the maximum amount allowed by the PFMA in emergency situations, follows the delay of the R7bn funds committed by the China Development Bank and the decline by the Corporation for Public Deposits to provide a bridging facility,’ the statement read. Read more “Tax Payer coughs up R17.6bn for Eskom”
The approval of R17.6bn funding is part of the R23bn allocated to the power utility in the 2019 national budget.
Author: GBA News Desk
