South Africa’s President Cyril Ramaphosa pledged on Thursday to speed up 230 billion rand ($16.11 billion) of support for ailing power utility Eskom, which he said was too vital to be allowed to fail.
In his first state of the nation address since leading his party to victory in a May 8 election, Ramaphosa said Eskom’s financial position remains a matter of grave concern.
“Eskom is too vital to our economy to be allowed to fail,” he said. “We will, therefore, table a special appropriation bill on an urgent basis to allocate a significant portion of the 230 billion rand fiscal support that Eskom will require over the next 10 years in the early years.”
National Treasury Director-General Dondo Mogajane told Reuters the government hopes parliament will approve the bill before the end of August.
In February the government pledged a 23 billion rand a year bailout over three years, but the firm says it needs more cash to keep the lights on after nationwide blackouts this year.
A trade union leader turned businessman, Ramaphosa replaced scandal-hit predecessor Jacob Zuma as president in February 2018 and then was elected president after his party won a majority in May 8 parliamentary elections.
He faces a huge task reviving an economy that just posted its biggest quarterly contraction in a decade.
Fixing Eskom and other loss-making state-owned firms such as South African Airways (SAA) is seen as critical to shoring up confidence among the investors South Africa relies on to finance its current account and budget deficits — the latter is projected to rise to 4.5% of GDP this fiscal year.
“To meet our growth targets, we will rebuild the foundations of our economy by revitalising and expanding the productive sectors,” Ramaphosa said, including “clothing and textiles, gas, chemicals and plastics, renewables, and steel and metals fabrication sectors.”
