Eskom will get another bailout

Too big to fail: Eskom boss Phakamani Hadebe will have to present a turnaround strategy. (Delwyn Verasamy)

Too big to fail: Eskom boss Phakamani Hadebe will have to present a turnaround strategy. (Delwyn Verasamy)

President Cyril Ramaphosa has told Parliament that Finance Minister Tito Mboweni will give details about a treasury bailout for Eskom during next week’s budget speech.

Ramaphosa was responding to Tuesday’s debate by MPs on his State of the Nation address (Sona).

Earlier this week Public Enterprises Minister Pravin Gordhan told Parliament that the power utility was in crisis.

Almost concurrently, parts of South Africa were flung into darkness for hours as Eskom reintroduced load-shedding.

The department’s acting director general, Thuto Shomang, told members of the parliamentary portfolio committee that Eskom was technically insolvent and in its current trajectory it would collapse by April.

He later added a disclaimer, saying it was likely the ailing state-owned enterprise would get a bailout from the treasury. The department, however, issued a corrected presentation late on Wednesday, removing any reference to Eskom’s insolvency, or the fact that it could cease to exist. Instead, it only made reference to Eskom’s “liquidity challenges”.

This was confirmed by Ramaphosa, who told MPs the bailout will be conditional on a detailed turnaround strategy from Eskom executives.

“It’s become clear Eskom needs to be assisted by the state, because doing so also means we are also stabilising the economy of the county,” he said.

The president admitted that a financial lifeline alone won’t be enough to save the ailing parastatal.
“There’s no single solution to the problems at Eskom. There’s no silver bullet. Neither restructuring, refinancing, cost-cutting, tariff increases or plant maintenance — on their own — will have the necessary effect.”

But he said: “Restructuring will reduce the risk of a massive Eskom, that at times has in its current form been termed ‘too big to fail’, placing government in a position where all its eggs are in one basket.”

Ramaphosa also dismissed claims by some political parties and labour unions that plans were afoot to privatise the utility. “The decision we took [and announced] at Sona [is] to establish three separate state-owned entities. And let me be clear. Three separate, 100% state-owned entities. For generation, transmission and distribution.”

A special Cabinet committee led by the deputy president, David Mabuza, would be set up to provide daily reports to the president, to update him about Eskom’s turnaround and the daily energy supply. On other matters raised during the Sona debate, Ramaphosa dismissed allegations by Congress of the People leader Mosiuoa Lekota that the president “condemned” him and other activists to the apartheid police Special Branch while they were young anti-apartheid activists.

Ramaphosa was at first reluctant to respond but later relented.

“I should not even dignify comments with any formal response, particularly with regard to what Honourable Lekota had to say. But let me set the record straight,” Ramaphosa said.

He went on to detail the circumstances of his own arrest in 1974 and how he was supported by his father, who was a police sergeant. He said he would have rather gone and broken rocks on Robben Island, as Nelson Mandela did, than betray comrades.

“When you deal with security police there’s three things they want with you. Either you co-operate with them — you give evidence against your comrades — or you become an askari and go kill your comrades or you become a paid agent. I did not do any of the three things they wanted.”

Ramaphosa also poured cold water on Economic Freedom Fighters leader Julius Malema’s call for a judicial commission of inquiry into Lekota’s allegations.

“I’ve no interest to appoint a commission that will only waste taxpayers’ money … Because the ordinary people know that there’s no truth in that [Lekota’s claims],” Ramaphosa said.

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