Home South African Finance Minister Tito Mboweni confirms R59bn Eskom bailout

Finance Minister Tito Mboweni confirms R59bn Eskom bailout

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Mboweni said without government support and changes to Eskom's business model, it would be unable to meet its operational and capital obligations.

Finance Minister Tito Mboweni.

PARLIAMENT  – Finance Minister Tito Mboweni on Tuesday tabled a special appropriation bill in the National Assembly, allocating an additional R59bln to Eskom over two years.

Mboweni said that Eskom will be allocated R26 billion this financial year and R33 billion in the 2020/2021 financial year. This was in addition to the R23 billion lifeline extended to the cash-strapped power utility in the February budget.

“Although government has committed R23 bln to be allocated to Eskom over the next three years years in the current fiscal framework, Eskom’s funding plan is dependent on their ability to raise additional finance from the market, which in turn requires them to be a going concern,” Mboweni said.

“It is therefore important to note that the proposed financial support for 2019/2020 and 2020/2021 financial years addresses the going concern status and enables Eskom to honour its obligations.

“This could substantially increase the government’s borrowing requirement for 2019/2020 which will require government to revise its funding strategy and currently weekly bond issuance at levels beyond what we had planned.”

Mboweni said without government support and changes to Eskom’s business model, it would be unable to meet its operational and capital obligations.

In this regard, Mboweni and Public Enterprises Minister Pravin Gordhan have been in consultations towards the restructuring of Eskom. A chief restructuring officer would likely be announced later on Tuesday.

African News Agency (ANA)