South Africa to announce plan to fund Eskom on July 23

The logo of state power utility Eskom is seen outside Cape Town's Koeberg nuclear power plant in this picture taken March 20, 2016. REUTERS/Mike Hutchings
FILE PHOTO: REUTERS/Siphiwe Sibeko/File Photo

South African Finance Minister Tito Mboweni aims to table a bill in parliament on July 23 to give struggling state power firm Eskom more money for the current financial year and next, to alleviate its acute liquidity problems.

Mboweni told parliament on Thursday that Eskom presented the biggest risk to the country’s fiscal framework and stressed that there were serious risks to the economy if it collapsed.

Eskom, which supplies more than 90 percent of the country’s electricity but has implemented severe power cuts this year, fails to generate sufficient profit to meet its debt-service costs and has required state cash injections to stay afloat.

Mboweni, a key ally of President Cyril Ramaphosa, added that the government would also provide financial support from its contingency reserve to ailing South African Airways, weapons manufacturer Denel and broadcaster SABC.

“This additional financial support cannot be a blank cheque to these state-owned enterprises,” Mboweni said. “We really and truly cannot go on like this.”

The minister said South Africa’s tax collection was underperforming due to a weak economic environment and the government would focus its short-term efforts on addressing rising debt and on stricter controls on expenditure.

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