Eskom bailout is a blank cheque, opposition MPs say
National Assembly approves allocation of R59bn to help power utility meet its financial obligations
The National Assembly on Tuesday adopted a bill which allocates cash-strapped electricity utility Eskom R59bn over the next two years — R26bn in 2019 and R33bn in 2020. But there was no unanimity on the issue among political parties.
Opposition parties including the DA, EFF, Freedom Front Plus, ACDP and UDM did not support the appropriation, which is in addition to the R23bn allocated to Eskom in the February budget for this year and another R23bn for next year. An undertaking was given then that Eskom would receive R23bn each year over 10 years.
Opposition parties argued that the bailout would not solve Eskom’s deep-seated problems and that without conditions being included in the bill, the utility was being given a blank cheque.
In concluding the first reading debate of the Special Appropriation Bill, finance minister Tito Mboweni stressed that Eskom’s problems were complex and could not simply be reduced to financial ones. One of the key issues to solve, he said, was to appoint the right people to run the utility both at board and management level and to hold them accountable.
The bill has been fast-tracked through parliament so that the funds can be released as soon as possible to meet Eskom’s need for cash. With debt of R450bn, it is unable to meet its operating costs and its obligations to lenders and suppliers.
The Treasury has imposed conditions on the R59bn bailout, including strict monitoring by the government of Eskom’s financial management, particularly its debt and cash management, but these have not been included in the bill itself. Eskom will also be required to sell off its internal lending operation — called Eskom Finance, which has a loan book of about R10bn — as one of the conditions of it receiving the cash injection. Furthermore, the funds can be used only to pay off debt and interest payments and not for things like bonus payments.
The ANC and DA agreed that conditions had to be applied by the government to prevent the bailout being a blank cheque, but they differed in that the ANC was satisfied for the conditions to be applied outside the bill while the DA wanted them included in the bill.
Appropriations committee chair Sifiso Buthelezi stressed that Eskom was too big to fail and had to be recapitalised, but that stringent conditions should be applied to the transfer of the funds.
DA MP Ashor Sarupen attacked the bill saying it gave Eskom a blank cheque and was a reward for “a culture of state capture and theft. It diminishes the importance of oversight and accountability for public money.” He was critical of the bill failing to attach conditions to the bailout.
The EFF and Freedom Front Plus did not support the allocation of more funds to Eskom, which EFF MP Floyd Shivambu said would not help the power utility out of its crisis.
The IFP supported the bill to keep the lights on, said MP Elphas Buthelezi.