'Eskom is now limping' – DA on Eskom’s cash scramble

DA Member of Parliament Alf Lees said on Friday that the emergency provision of R17.6bn to Eskom in terms of section 16 of the Public Finance Management Act was a clear indication of the power utility's dire financial situation.

This after Finance Minister Tito Mboweni was forced to write to Parliament to access funds when the China Development Bank (CDB) failed to release an amount of R7bn from a $2.5bn facility that the utility and the bank concluded last year.

The CDB funds did not arrive on time because the bank was "unfortunately unable to timeously execute this planned drawdown due to its central bank exchange control requirements".

This sent Eskom and National Treasury scrambling for funds at the 11th hour to ensure that Eskom was able to meet its obligations at the end of March.

Mboweni's report to Parliament is expected to be included in the legislature's circular of announcements, tabling and committee statements soon.

In a statement released on Friday, Lees said it was clear that the cash crisis at Eskom was far worse than initially thought.

"The Fifth Parliament remains in operation and it is the view of the DA that there is an urgent need for the Parliamentary committees of Finance, Appropriations and Public Enterprises to hold a joint meeting to be fully briefed on the financial crisis facing Eskom, and to provide a report with recommendations to Parliament," Lees said.

"It is extraordinary that this crisis was so obvious that even Minister Mboweni was forced to include a current year bailout for Eskom of R23bn but failed to introduce a special appropriation bill to ensure the funds were available for Eskom to keep the lights on."

Mboweni, however, said in his report to the legislature that at the time when he delivered his Budget speech in February, it was anticipated that Eskom would continue to raise the required funding, which is supported by Government guarantees, until Parliament was constituted following the elections.

"However, by the end of March 2019, it became evident that Eskom was experiencing difficulties in raising the required funding as well as drawing down on existing facilities," Mboweni wrote to the legislature.

Mboweni said as a contingency measure, Eskom requested Absa Capital to provide a R3bn bridging facility, which was supported by a government guarantee. 

Currently government’s exposure to Eskom in terms of guarantees is R281bn. 

The Department of Public Enterprises has since expressed confidence that the money from the CDB will arrive by month's end. Numerous attempts to reach Eskom for comment have failed.

Eskom is saddled with R419bn of debt and isn’t selling enough power to cover its interest payments and operating costs, a legacy of years of mismanagement and cost overruns on new plants, among other things.

The embattled utility has previously also had to implement days of load shedding as it struggled to keep the lights on.

ZAR/USD
17.50
(+0.89)
ZAR/GBP
22.95
(+0.83)
ZAR/EUR
20.64
(+0.63)
ZAR/AUD
12.57
(+0.71)
ZAR/JPY
0.17
(+1.11)
Gold
1958.50
(-3.41)
Silver
27.26
(-6.16)
Platinum
941.51
(-4.28)
Brent Crude
44.95
(+1.33)
Palladium
2115.06
(-4.70)
All Share
57503.13
(+1.31)
Top 40
53157.77
(+1.38)
Financial 15
10142.18
(+2.47)
Industrial 25
75554.77
(+1.18)
Resource 10
59725.74
(+1.32)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 950 votes
It depends on how the funds are used.
74% - 6338 votes
No. We should have gotten the loan elsewhere.
15% - 1307 votes
Vote