Tito Mboweni confirms R59bn lifeline for floundering Eskom

Finance minister Tito Mboweni has tabled a special appropriation bill to provide an additional R59bn to Eskom to help the debt-ridden power utility meet its financial obligations in the current and next financial years.

Finance minister Tito Mboweni. File photo.
Image: Sunday Times/Esa Alexander

The special bill will provide funding from the National Revenue Fund to allocate an extra R26bn to Eskom in 2019/20 and R33bn for 2020/2021. This is on top of the R69bn that the energy company was allocated in the national budget in February.

“I stated before during my budget vote that Eskom presents the biggest risk to the financial fiscal framework because of its financial difficulties and its negative impact on the lives of ordinary South Africans,” said Mboweni while tabling the bill on Tuesday.

“Given the risks to the economy of the systemic failure if Eskom were to collapse, the government is working urgently to stabilise the institution whilst developing a broad strategy for its future,” he added.

Mboweni said the serious financial and operational challenges faced by Eskom were, to a large extent, caused by governance challenges which were playing themselves out at the Zondo commission. The entity previously experienced many difficulties and a decline in investor confidence.

“As it stands Eskom is not financially sustainable based on its current high levels of debt and its inability to generate sufficient revenue to meet its operational and capital obligations which exposes the entity to high levels of liquidity and balance sheet stresses,” he added.

He said without major changes to Eskom’s business model and financial assistance being provided by the government, the company would be unable to meet its financial obligations for the 2019/20 financial year.

“At a strategic level, we must just face the reality that a large vertically integrated energy company is an outdated model in a changing industry both domestically and internationally.

BY NDISIWE MAKINANA- TimesLIVE

Source: TMG Digital

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