Assets to be sold to fund Eskom

2010-11-11 10:52

State holdings are to be liquidated to fund a R20-billion equity injection for Eskom’s build programme, government spokesperson Themba Maseko said today.

Briefing the media following Cabinet’s regular Wednesday meeting, he said Cabinet had noted and supported a hybrid funding solution to enable Eskom to continue its programme to ensure the security of energy supply.

The government hoped strengthening Eskom’s balance sheet by R20 billion would help keep electricity prices under control, he added.

The hybrid funding solution would also see the state nearly doubling its guarantee framework from R176 billion to R350 billion to enable Eskom to continue with its committed build programme for the Kusile Power Station, and an equity injection of R20 billion over three years, starting in the 2011/12 financial year.

“The equity injection will be funded from liquidating state holdings in non-strategic and non-core assets.”

National Treasury would identify such assets in due course and in consultation with the public enterprises department and other relevant departments, Maseko said.

He said the latest lifeline to Eskom could be seen as a government attempt to shield consumers from further large electricity price increases, and the economy from the inflationary effect of these.

“Government is also trying to fight the inflationary effect of the huge tariff increases that Eskom has been imposing.

“They still have a responsibility of submitting tariff increase proposals that they think will strengthen the balance sheet... but we are not likely to see tariff increases in the region of 30, 40%. That is what we are trying to do with this initiative.”

Maseko would not comment on whether Eskom was given the cash injection on condition that it would temper its demands for tariff increases. It began implementing average annual increases of 25% this year for a three-year period.

“We want to strengthen their balance sheet,” he said, adding that Cabinet did not “want to raise expectations” with the public on prices.

He said Cabinet saw selling off non-core holdings as a smarter move than simply increasing the national budget.

Eskom hopes to spending more than R385?billion over the next five years to build the infrastructure it needs to meet the country’s electricity demand, and prevent a repeat of the power crisis a few years ago.

“The issue of security of supply is a major challenge for the nation... load-shedding is to be avoided at all cost.”?

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.