SA Government Plans on Taking a Portion of Eskom’s R400 Billion Debt

News Flash

  • The South African government has announced in its Medium Term Budget Policy Statement that it will take over a portion of Eskom’s R400 billion debt, but this is yet to be budgeted for and details have unfortunately been deferred to the 2023 budget. 

The SA Government has announced plans to take over a portion of Eskom’s R400 billion debt to enable the utility to restructure, applying strict conditions to safeguard public money. “Eskom is the biggest known risk to the economy and the public finances. A lower debt burden will enable Eskom to implement a viable unbundling process and make resources available for investment in critical electricity supply and transmission infrastructure,” said Mr Enoch Godongwana, South Africa’s Minister of Finance.

“We have not identified the conditions,” added Godongwana explaining that Treasury is in the process of appointing a skilled, independent party to conduct an audit of Eskom. “What we want out of this is operational efficiencies at Eskom so that they don’t come back to us.”

Eskom’s Interim Results for the Six Months ended September 2021 revealed gross outstanding debt of R392.1 billion. Eskom forecasts a net loss after tax of R9.1 billion at financial year end in March 2022. The projected loss is mainly due to lack of cost-reflective tariffs, unsustainably high debt service cost, growing municipal arrear debts and sustained high expenditure on diesel for Open-Cycle Gas Turbines (OCGTs) to supplement generation capacity and to reduce loadshedding.

Eskom Delays AFS

On 29 September Eskom notified its stakeholders that due to the delayed appointment of the external auditors as announced on 4 November 2021 and the extensive process of taking on a new audit, as well as the time it has taken to resolve several issues that were raised during the audit, Eskom Group’s audited Annual Financial Statements for the year ended 31 March 2022 (“2022 AFS”) are anticipated to be published by end November 2022. Read more

 Author: Bryan Groenendaal

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