budget 2019: BIG ISSUE
ESKOM: Government to pour R69bn more into a sieve
Trade unions are likely to oppose the plan to sell part of Eskom’s transmission assets to a new equity investor
Despite talking tough, and likening Eskom to a sieve, finance minister Tito Mboweni has given it a R69bn cash bailout over the next three years. That assistance will be limited to R23bn a year during Eskom’s reconfiguration into three entities, Mboweni said during his maiden budget speech in parliament. It is notably less than Eskom CEO Phakamani Hadebe would have wanted. For a start, the power utility had asked Cyril Ramaphosa’s government to take over R100bn of its R420bn outstanding debt, given that it cannot independently meet all its financial obligations. The problem is that the debt attracts annual interest of R45bn, which dwarfs Eskom’s cash generated from operations. Add in the extra R50bn which Eskom must spend on expanding and maintaining power plants, and the utility plunges into a loss. "Pouring money into Eskom in its current form is like pouring water into a sieve," Mboweni said. "I want to make it clear: the national government is not taking on Eskom’s debt. Eskom to...