Photo by: Creamer Media's Donna Slater
Finance Minister Enoch Godongwana confirmed that Eskom will receive a further R88-billion in government support until 2025/26 and that a comprehensive debt solution was still being explored for the financially unsustainable State-owned electricity producer.
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.
The utility has argued on several occasions that its debt position would be sustainable only if it was halved to about R200-billion.
Godongwana acknowledged that a portion of Eskom’s debt was “distressed” but said that further support would be contingent on the utility demonstrating turnaround progress and taking self-help measures.
“We expect Eskom to take steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply,” the Minister said, while describing the utility’s current performance as being worse than it was when the electricity crisis first emerged in 2008.
He also argued that more attention needed to be given to fixing the electricity supply industry than to fixing Eskom alone, adding that more private investment was required to do so.
Repeating his “tough love” mantra, he said that Eskom and other State-owned companies in distress could not expect “blanket” support from the National Treasury and that every request for support would be treated on its own merits.
“We acknowledge, however, that Eskom is faced with a large amount of debt that remains a challenge to service without assistance.
“The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders.”
The Minister described the search for a solution as legally and technically complex and said the outcome would be announced within the next financial year.
Meanwhile, the National Treasury confirmed that Eskom’s guarantee exposure increased by R29.6-billion to R327.9 billion in 2021/22 owing to additional drawdowns.
Government’s total amount for approved guarantees is expected to decrease by R21.5-billion to R560.1-billion by the end of March 2022, with associated exposure estimated to increase by R32.1-billion to R416.8-billion.
Eskom accounts for 78.7% of these guarantees.