Budget 2022

'Eskom is not a bank' warns ANC as Mboweni prepares power utility's new funding plan

Enoch Godongwana. (Pic: Wynand van der Merwe)
Enoch Godongwana. (Pic: Wynand van der Merwe)

While funding plans for debt-ridden power utility Eskom have not yet been finalised, Finance Minister Tito Mboweni is likely to make more detailed announcements on the matter at the mini budget later this month, the ANC's Enoch Godongwana has said.

The ruling party's head of economic transformation made the remarks on Wednesday, speaking at a media briefing on the outcomes of the ANC's National Executive Committee meeting.

The NEC met over four days earlier this week and discussed, among other issues, the country's economic recovery and transformation strategy.

ANC General Secretary Ace Magashule had said it was the NEC's view that the restructuring of Eskom and addressing its "unsustainable financial position" was a priority.  

During a question and answer session at the briefing, Godongwana said that addressing issues at Eskom would not be complete without considering its funding model.

'The matter will be dealt with'

"I think by the time the minister (Mboweni) makes a statement on the 30th (of October), that matter will be dealt with," he said.

Godongwana also stressed that the restructuring of Eskom into three entities did not amount to not privatisation.

He also weighed in on the sale of non-core assets at the entity, which include its finance company.

"[Eskom] is not a bank, it’s an electricity generation company," Godongwana said. The power utility is trying to offload the finance company to "people who can do it better", he added.

In August, Treasury Director-General Dondo Mogajane told the Standing Committee on Appropriations that for Eskom to receive any additional funding from government, the power utility would need to meet a set of conditions. One of these was the sale of non-core assets.

"They (Eskom) are sitting with a R10bn loan book. Eskom is not in the business of running financial operations. They can sell that off to someone who does that for a living – not them," Mogajane said at the time.

Earlier this year, Mboweni had tabled a special appropriations bill that would see Eskom receive an additional R59bn over the next two years. This is over an above the three-year allocation of R69bn Treasury made to Eskom at the national budget in February 2019.

The R59bn is strictly to be used by Eskom to meet its financial obligations – such as debt repayments and interest payments. If Eskom requires funding for other operations, it needs to first seek approval from Treasury, Mogajane said.

Parts of SAA to be sold off

The Sowetan meanwhile reported that the NEC agreed portions of state-owned airline SAA should be sold off. Godongwana told the Sowetan on the sidelines of the briefing that international carriers might buy parts of the airline. At the time of publishing, Godongwana could not immediately be reached by phone to confirm further details.

Earlier on Wednesday Fin24 reported that the SAA and SA Express'financial reports for the 2018/19 could not yet be finalised due to financial chellenges both airlines are facing. Public Enterprises Minister Pravin Gordhan has told Parliament that the annual reports will be tabled once the going concern challenges of the airlines is resolved. 

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