Gigaba: We can’t bail out Eskom, no nuclear for now

Sunrise over power lines in the Free State. Picture: Herman Verwey
Sunrise over power lines in the Free State. Picture: Herman Verwey

The country’s coffers cannot afford any costly nuclear programme and the government wasn’t in a position to bailout Eskom, Finance Minister Malusi Gigaba said.

Addressing a closed a pre-Medium Term Budget Policy Statement (MTBPS) press conference earlier today, Gigaba said the country’s fiscus was not in a position to bail out Eskom if its current turnaround plan did not work out.

“Government is not a nanny that must just provide government guarantees whenever,” he said.

See below for Gigaba's full MTBPS Speech

Finance Minister Malusi Gigaba presented the Medium Term Budget Policy Statement in Parliament.

Gigaba said Eskom, which is government’s single biggest fiscal liability with R350 billion worth of government guarantees extended until 31 March 2023, had become too much of a risk and with the government almost reaching its expenditure ceiling, one more mess-up at the utility would be too much for another bailout.

He said South Africa could not afford any costly nuclear programme, which has been speculated could cost over a trillion rand.

“Nuclear remains part of the country’s energy mix but the country and the budget cannot afford it. It is not off the agenda,” he said, adding that the country has more electricity than it needed because of the poorly performing economy.

Gigaba also said government was compiling a list of state assets, both core and non-core, that might be disposed of in order to provide money needed to avoid breaching the fiscal ceiling.

Treasury director-general Dondo Mogajane said that among the assets that might be put on the government’s disposal list – which would be ready by next March – was the government’s Telkom shares. The government has a stake of almost 40% in Telkom.

In supporting Gigaba’s assertions, Deputy Finance Minister Sifiso Buthelezi said the fact that Eskom was too big to fail did not mean individuals would not fall.

Gigaba remained tightlipped on the upcoming wage negotiations. However he said government would be seeking the best deal possible at the negotiation table with the trade union.

He also said Cabinet had approved a meeting between a number of departments, including Mineral Resources and the Chamber of Mines, to discuss the current impasse over the Mining Charter.

Gigaba also announced that the government’s aviation asserts would be consolidated and a strategic partner brought in. He did not provide details of the earmarked partner nor the form of partnership.

According to the MTBPS, South African National Roads Agency Limited (Sanral), which is the second biggest burden on the fiscus with a R38.9 billion guarantee meant to expand its toll roads portfolio, is still failing to collect projected e-toll fees even after it claimed to have introduced a lower-cost dispensation of its model.

The Department of Water and Sanitation’s Trans-Caledon Tunnel Authority (TCTA) is also a major burden with R25.7 billion worth of government guarantees already issued to it.

Full MTBPS speech deliverd by Finance Minister Malusi Gigaba:

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