Eskom is to get R150bn over the next 10 years from the government in a massive bail-out that it is hoped will put an end to its financial crisis. The support will come in the form of a transfer of R23bn a year to be used to cover a large share of Eskom’s interest and debt repayments, and was announced in the Budget Review on Wednesday.

It is part of an overall plan to rescue Eskom by splitting it into three state-owned companies, cutting costs and securing tariff increases. The R69bn is part of the government’s spending plans for the next three years; thereafter it is accounted for in government’s long-term borrowing plans. Eskom is deep in financial distress with R419bn of debt, which it has been unable to service from its own revenue. The risk of a default is widely viewed as the single largest risk to the economy. Finance minister Tito Mboweni was adamant, however, that Eskom’s debt was not being forgiven and that it must continue to service and repay it with the help of fi...

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