Ramaphosa announces special funding bill to save Eskom

Parliament will urgently table a special appropriations bill to allocate a 'significant portion' of the R230bn in fiscal support that struggling power utility Eskom requires, President Cyril Ramaphosa has said. 

Ramaphosa made the announcement during his State of the Nation address to a joint sitting of both houses of Parliament in Cape Town. He did not say what proportion of the R230bn would be allocated.

He said Eskom only has sufficient cash to meet its obligations until the end of October 2019. 

The struggling state-owned power utility produces over 90% of South Africa's electricity but does not generate enough revenue to make a profit or pay off the interest on its mounting debt burden. According to Bloomberg calculations, Eskom's debt is approaching R500bn. 

In his Budget address in late February, meanwhile, Finance Minister Tito Mbownei announced that Eskom had been allocated a financial support package of R23bn a year for the next ten years. This would amount to R150bn amortized over the decade.

On Thursday Ramaphosa said the special appropriations bill had to be implemented because "Eskom is too vital to our economy to be allowed to fail". 

He said that further details would be provided by the minister of finance. 

The utility could not be allowed to default on its debt he said. 

"For Eskom to default on its loans will cause a cross-default on its remaining debt and would have a huge impact on the already constrained fiscus."

ZAR/USD
17.35
(+0.20)
ZAR/GBP
22.73
(+0.11)
ZAR/EUR
20.56
(+0.07)
ZAR/AUD
12.46
(-0.06)
ZAR/JPY
0.16
(-0.11)
Gold
1943.35
(-0.68)
Silver
26.38
(-3.85)
Platinum
943.00
(-1.66)
Brent Crude
45.01
(-1.03)
Palladium
2109.00
(-2.75)
All Share
57077.48
(-0.60)
Top 40
52737.48
(-0.65)
Financial 15
10156.41
(-0.69)
Industrial 25
75107.47
(-0.84)
Resource 10
58926.78
(-0.40)
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% - 1004 votes
It depends on how the funds are used.
74% - 6747 votes
No. We should have gotten the loan elsewhere.
15% - 1417 votes
Vote