A massive bailout for Eskom of R150bn over the next 10 years will be a key part of the plan to rescue the troubled company, Treasury officials said on Wednesday.
The budget, which was tabled in parliament by finance minister Tito Mboweni, allocates R23bn a year over the next three years to Eskom. The rescue plan includes a further R23bn for the seven years after that which is penciled into government’s long-term borrowing plans, officials said. Amortized over 10 years, the full package amounts to R150bn in 2019 prices.
The size of the package could vary, affected by several factors, “including economic growth, tariffs, electricity demand and the rate of reform of the electricity sector”, said Ian Stuart, acting head of the budget office.
Eskom is in deep financial distress with more than R400bn in debt which it is unable to service from its revenue. Eskom chair Jabu Mabuza said the support package over the next three years would cover 65% of Eskom’s interest costs.
As a condition of the bailout, the ministers of finance and public enterprises would appoint a chief reorganisation officer with the explicit mandate to implement the recommendations of the presidential task team into Eskom.
