Questions related to Eskom dominated the media briefing as journalists wanted to know why the resolution had been delayed to the February 2023 Budget, what was the quantum of relief that the Treasury would provide and would it be one lump sum or spread over several years.
THE SOUTH African government will be taking on a huge chunk of Eskom’s R400 billion debt as part of a comprehensive approach to address the utility’s financial challenges. However, taxpayers will have to wait until February 2023 to get the full details of this takeover and how this would impact public finances.
During the tabling of his Medium-Term Budget Policy statement on Wednesday, Finance Minister Enoch Godongwana said that the government was planning to provide relief for both guaranteed and non-guaranteed debt to Eskom.
Questions related to Eskom dominated the media briefing as journalists wanted to know why the resolution had been delayed to the February 2023 Budget, what was the quantum of relief that the Treasury would provide and would it be one lump sum or spread over several years.
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Part of the reason for the delay was that there were several stakeholders involved with an army of lawyers and accountants wanting to make sure that their clients’ interests were protected so that Eskom bond holders would not lose out.
The most important reason for the delay, however, was that the National Energy Regulator of South Africa (Nersa) still had to make a finding on Eskom’s tariff application for next year. That, in turn, would determine how much debt relief Eskom would require. Nersa’s decision is expected in December 2022.
Eskom has already been provided with R136 billion to pay off its debt with a further R88bn budgeted for until 2025/26. Godongwana acknowledged, however, that Eskom was faced with a large amount of debt that remained a challenge to service without government support, which was why the Treasury was working on a sustainable solution to deal with Eskom’s debt in a manner that was equitable and fair to all stakeholders.
Any proposed solution would be contingent on continued progress to reform South Africa’s electricity sector and Eskom’s own progress on its turnaround plan and its restructuring. To help with debt reduction, the government expected Eskom to take further steps towards cost containment, conclude the sale of assets and implement operational improvements to enhance the reliability of electricity supply.
Godongwana said the Eskom debt relief would be spread over several years and that further details would be provided in the February 2023 Budget.
He was not averse to helping deserving causes, which is why he announced a R20bn “Bounce Back” allocation in the February 2022 Budget that would help small businesses to bounce back from the Covid-induced lockdown restrictions that saw several small businesses shut down as they did not have any reserves to weather the storm of reduced tourism and restaurant activity.
The window period for applications for relief was for 18 months from May 2022, so the Treasury said they could not provide an update currently, but they expected to give an indication of the uptake by the end of this year.
The Department of Small Business Development will work with municipalities to reduce administrative and regulatory burdens for small, medium and micro enterprises and co-operatives. Government will deepen collaboration with Proudly South African to support over 1,000 informal businesses in 2023/24 and just under 4,000 informal businesses over the MTEF period. It will also provide support to small enterprises in the cannabis industry over the same period.
– BUSINESS REPORT
