DA demands answers on Eskom bailout

Eskom's Medupi power plant was supposed to have come online by the end of last year, but is running behind schedule as a result of labour disputes. (Madelene Cronje, M&G)

Eskom's Medupi power plant was supposed to have come online by the end of last year, but is running behind schedule as a result of labour disputes. (Madelene Cronje, M&G)

Responding to Sunday’s announcement by Cabinet that it had approved a funding package to help Eskom with its R225-billion shortfall, Democratic Alliance (DA) MP Natasha Michael said she would write to Public Enterprises Minister Lynne Brown and Finance Minister Nhlanhla Nene to request documents relating to the bailout.

“Reports suggest that businesses and consumers are to carry a large portion of the load through increased electricity tariffs,” Michael said. “We need absolute clarity on these tariff increases, the process followed in making this decision and the proportion of the debt to be absorbed directly by taxpayers through increased tariffs.” 

In its statement on Sunday, the government said  it would support Eskom’s application to the National Energy Regulator of SA (Nersa) for tariff adjustments in line with the regulatory process.

It announced a bail-out package aimed at plugging  its R225-billion funding gap and helping it get back to financial sustainability.

The rescue plan comes as Eskom continues to face serious operational challenges, heightening the risk of more load shedding for consumers.  

The National Treasury announced that the plan was aimed at helping to “relieve the impact on electricity consumers, as well as add additional support to Eskom’s balance sheet”.

It will include government support for regulatory tariff adjustments and further funding for the state-owned supplier, with the amount to be announced at October’s medium-term budget policy statement. 

The equity injection will come from “leveraging non-strategic government assets” – suggesting possible privatisation – with further detail to be revealed at the budget announcement.

Eskom will also raise additional debt of R50-billion, over and above the R200-billion earmarked for the current tariff cycle. “While higher debt levels do have a negative impact on Eskom’s balance sheet, it is necessary to reduce the immediate impact on electricity consumers,” said the statement. 

Eskom has existing government guarantees of R350-billion, of which it has only drawn R122-billion. The treasury said the guarantees will be used to reduce Eskom’s debt costs but stressed it needed to manage costs and raise sufficient revenue to cover these. – Sapa, staff reporter

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