Finance Minister Enoch Godongwana has kept the country’s purse shut from Eskom, for now, but promised a new debt relief plan for next year.
There was much anticipation around how much Godongwana would allocate to Eskom in his Medium-Term Budget Policy Statement, delivered on Wednesday, to enable it to service its over R400 billion debt.
Godongwana flagged the utility as the largest long-term risk to the economy and the biggest known risk to public finances.
In his mid-term statement, Godongwana made a clear commitment to takeover a portion of Eskom’s debt, but said the method of effecting the relief was yet to be determined.
“While the selection of the relevant debt instruments and the method of effecting the relief is still to be determined, the quantum is expected to be between one-third and two-thirds of Eskom’s current debt. The debt takeover, once finalized, together with other reforms will ensure that Eskom is financially sustainable,” he said.
This means Eskom will be given between R133 billion and over R260 billion.
In 2019, the utility was given a R230 billion bailout to remain financially viable and R140 billion of that amount has already been used to settle debt and interest payments.
But Eskom still remains in a tight spin, having exhausted over 90% of its R350 billion guarantee, the government is now compelled to design a new debt relief programme for the utility.
Godongwana said the debt relief will be guided by strict conditions that emphasize progress in significant reforms such as the unbundling process and financial sustainability.
-EWN
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