The bailout for Eskom this financial year is set to total R49-billion, rising to R56-billion for the following year.
This is according to a draft of the special appropriations Bill for Eskom, to be announced by finance minister Tito Mboweni in parliament tomorrow, a version of which the Mail & Guardian has seen. Although the Bill makes provision for the finance minister to impose conditions that Eskom must meet once part of the money is transferred – the conditions are not specified or outlined in detail.
According to the Bill an amount of R59-billion will go to the embattled power utility – spread out across this financial year and the next. Eskom will receive an additional amount of R26-billion for the current financial year (2019/20) and a further R33-billion for 2020/21. The money will come from the national revenue fund.
The fast tracked support was announced by President Cyril Ramaphosa in last month’s state of the nation address in which he said a portion of the R230-billion that has been earmarked for Eskom in the coming decade (or R23-billion a year), would be paid to the utility in the early years. Ramaphosa’s announcement – which will essentially see the front loading of the financial support – was made due to the parlous state of Eskom’s finances.
In the SONA Ramaphosa said that Eskom only had sufficient cash to meet its obligations until the end of October. “For Eskom to default on its loans will cause a cross-default on its remaining debt and would have a huge impact on the already constrained fiscus,” Ramaphosa said.
In this year’s February budget Mboweni outlined the first round of the support package with R23-billion allocated each year for the coming three years — but he said the financial assistance would come on condition of the appoint of a chief re-organisation officer (CRO).
The bill indicates that the finance minister must impose conditions on Eskom after any part of the money is transferred to the utility — the bill does not however outline what these conditions are. Any part of the money that is allocated but not spent by Eskom must be returned to the revenue fund.
A spokesperson for the National Treasury declined to comment on the Bill, saying that the department would wait until after it is formally tabled in the national assembly.
Energy policy expert professor Anton Eberhard tweeted that the step made him “sick to my stomach”
“We the people are paying. Time to get serious around restructuring and a new business model,” he said.
We fought hard around a VAT increase from 14% to 15%, R23 billion at the time. Now it’s gone, whoosh, on the R59 billion for Eskom. We, the people are paying. Time to get serious around restructuring and a new business model
— Anton Eberhard (@AntonEberhard) July 22, 2019
The utility is weighed down by over R440-billion in debt, and is expected to report a loss of more than R20-billion next week when it is due to report its financial results.
In May the company announced that its chief executive officer Phakamani Hadebe would be stepping down at the end of July citing health reasons. In recent days the utility posted an advertisement for his replacement — circulated on social media — with a deadline for applications of 2 August..