STATE-OWNED COMPANIES
Eskom finance identified as economy’s major risk
Eskom’s financial position is the single biggest risk to the economy and public finances, the National Treasury has said in a document highlighting the fiscal risks to the public sector in the new year. The contingent liabilities of other state-owned companies, uncertainty in the growth forecast and the public sector wage bill have also been identified as major risks to the fiscus. Eskom, independent power producers and the Road Accident Fund (RAF) account for the majority of the government’s contingent liabilities, which are commitments that could evolve into financial obligations in future, according to the 2018 Budget Review. The power utility, which saw profits plunge to R888m from R5.1bn in the 2016-17 financial year despite an average 8% tariff increase, is expected to use R17.9bn of its guarantee annually over the next three years. Of its R350bn guarantee agreement, R96bn was unallocated and was extended to 2023. Provision for claims from the RAF had risen to R189.2bn from R9...
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