INSIDE POLITICS TEAM|
FINANCE minister Enoch Godongwana said on Wednesday that the National Treasury was working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders.
Addressing MPs in Parliament, Godongwana said government was aware that Eskom’s debt situation was a concern for Eskom creditors and investors.
The finance minister said that Eskom will receive R88-billion in government support until 2025/26, and that a comprehensive debt solution was still being explored for the embattled power utility.
The support comes in addition to the R136-billion already provided or committed to enable the utility to pay back its debt, which currently stands at close to R400-billion.
Godongwana said he had been advised that out of that debt pile roughly R135 billion could be considered “distressed”.
Eskom debt has been named by rating agencies as the biggest threat to the South African economy.
“We acknowledge, however, that Eskom is faced with a large amount of debt that remains a challenge to service without assistance,” said Godongwana.
He said that while National Treasury will ultimately have to take over a portion of Eskom’s debt, he wants to see the company increase efficiencies and sell assets – including coal power stations – before it does.
“Any solution will be contingent on continued progress to reform South Africa’s electricity sector and Eskom’s own progress on its turnaround plan and its restructuring. We expect Eskom to take further steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply,” he said.
The outcome of this work, which is legally and technically complex, will be announced within the next financial year, said the finance minister.
“We have taken action to reform the electricity sector. This encompasses the lifting of the registration threshold of embedded generation to 100 megawatts. It also includes amendments to the Electricity Regulation Act of 2006, and the new generation projects that are coming online over the next few years. These interventions demonstrate our commitment to solving South Africa’s electricity supply challenges,”said Godongwana.
South Africa’s utility giant can’t sell enough power to cover its costs and hasn’t properly maintained its aging coal plants.
But labour unions, key allies of President Cyril Ramaphosa, oppose the restructuring plans that management says are necessary to turn around Eskom.
The result has been a prolonged crisis in the country’s power sector.
– Inside Politics
