Budget buster: Finance Minister Tito Mboweni has to keep rescuing Eskom (David Harrison/M&G)
COMMENT
As we all know, we now pay twice for electricity: once through the tariff and again when we pay our taxes. I wonder what my electricity is costing if the fiscal support is included.
Finance Minister Tito Mboweni said in his February budget that R23-billion a year would be given to Eskom for the next three years.
This week he used a special appropriation Bill to add R26-billion this year and R33-billion next year, bringing government’s total support over the next two years for our own home-grown version of an imploding death star to R105-billion.
Eskom is expected to reveal the perilous state of its finances next week, when it releases its annual results. Its loss for the year is expected to be about R20-billion.
It reported revenue of R90-billion at the halfway stage in November, but warned that it expected its second-half numbers to be lower.
Its sales have been moving sideways or down, a combination of a moribund economy (at least in part Eskom-induced) and its customers cutting back on usage or switching to alternative energy sources.
Eskom’s last full-year report put its sales at R175-billion. Assuming no change for the present year, the R49-billion (R23-billion plus R26-billion) from Mboweni this year tops this up by 28%.
Its average tariff, as published in its 2018 integrated report, was 85 cents a kilowatt hour. Mboweni’s handout this year adds 23.8 cents.
There are other ways to think about these numbers.
The country has 17-million households. The R105-billion bailout over the next two years equates to R6 200 per household.
We have 7.6-million taxpayers; this is an average of R13 800 per taxpayer over the two years.
If we express the cost in terms of green energy opportunities foregone, the R105-billion over the next two years is half the R200-billion spent procuring energy through the renewable energy independent power producers programme.
Analysts estimate that borrowings to fund the Eskom bailout could push our budget deficit to 6% of gross domestic product, with Reserve Bank governor Lesetja Kganyago warning this week that bailouts for state-owned companies risk pushing the country’s debt-to-GDP ratio to among the highest in emerging markets.
President Cyril Ramaphosa announced in his State of the Nation address in June that a chief restructuring officer would be appointed to help the Eskom chief executive plug the holes in the sinking ship.
Mboweni said on Tuesday the chief restructuring officer would be named later in the day. But we’re still waiting. We’re also waiting for a new chief executive after Phakamani Hadebe quit, presumably buckling under the inordinate strain.
These are Herculean jobs, requiring considerable financial, engineering and management skills. They also need heavyweight political backing.
We have such a politician in the public enterprises minister, Pravin Gordhan, but he finds himself embroiled in internecine lawfare with the public protector, now with a set of damning court judgments against her, over a unit formed in the tax authority 12 years ago and a pension payout made nine years ago, even though both matters have already been subject to scrutiny by independent authorities.