Eskom to get large portion of R230bn bailout sooner, Cyril Ramaphosa says
The president says parliament will pass a special appropriation bill ‘on an urgent basis’ to enable a significant portion of this to be allocated ‘in the early years’
Eskom will receive a larger portion of the support promised in February's budget sooner, in order to alleviate its financial crisis.
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“The utility’s financial position remains a matter of grave concern.
“With the current committed funding from government outlined in the 2019 budget, Eskom has sufficient cash to meet its obligations until the end of October 2019,” Ramaphosa said.
“For Eskom to default on its loans will cause a cross-default on its remaining debt and would have a huge impact on the already constrained fiscus.
“We will therefore table a special appropriation bill on an urgent basis to allocate a significant portion of the R230bn fiscal support that Eskom will require over the next 10 years in the early years. This we must do because Eskom is too vital to our economy to be allowed to fail,” the president said.
Eskom has R440bn in debt, which it is unable to service from the revenue it earns. It is also unable to repay the R45bn of debt that falls due in 2019 or to raise new funding from financial markets.
Ramaphosa’s announcement comes in time to provide comfort to the utility’s auditors, who must finalise the annual financial statements within the next few weeks. However, he stopped short of announcing any major decision on how Eskom will be restructured into a sustainable company.
Ramaphosa said that the government would soon announce a new CEO for Eskom, as well as a chief restructuring officer.
Consumers would also need to accept that they needed to pay for electricity.
“The days of boycotting payments are over. We call on all our people who use electricity: let us pay up,” he said.
Correction: June 20 2019
A previous version of this story incorrectly stated that the bailout of R230bn was new. It was announced on Thursday that the government would pass a bill to accelerate the previously announced bailout.