President Cyril Ramaphosa has announced that power utility Eskom is set to receive a R230bn bail out over the next ten years, in order to ease its much-documented financial issues.
Ramaphosa was addressing Parliament in his State of the Nation Address, where he linked the country’s slow economic growth to the current financial turmoil at Eskom.
The bailout is to assist the utility with meeting its multi-billion rand debt, in an effort to prevent an adverse impact on the national fiscus.
Ramaphosa said an urgent bill will be tabled in order to allocate some of the funds needed by the parastatal.
“Eskom is facing serious financial, operational & structural problems,” Ramaphosa said.
“We will therefore table Special Appropriation Bill on an urgent basis to allocate significant portion of R230 billion fiscal support that Eskom will require over next 10 years in the early years.”
Eskom scores second bailout of 2019
The bailout comes just months after a the power utility was handed R69bn by the government, in a rescue mission that was accompanied by the implementation of a task team given the mammoth duty of getting the ball rolling in turning around the company’s fortunes.
The earlier fee was subject to Eskom meeting certain performance targets.
The power utility has racked up a debt estimated to be around R500’m, while struggling to generate enough revenue to cover its operating costs.
The president had, earlier in the week, met with Eskom’s board, following up on the implementation of its turnaround strategy.
This comes months after the power utility had briefed Parliament on how it planned to clean its house up in order to effect improvement in terms of stability.
The recovery plan has since it was presented in November 2018 placed Eskom in a slightly better position following some key alterations in its operations.
Ramaphosa indicated that more light on the matter will be shed during Finance Minister Toto Mboweni’s upcoming budget speech.
“This we must do because Eskom is to vital to our economy to be allowed to fail. Further details will be provided by the Minister of Finance in due course.”