Ramaphosa announces special funding bill to save Eskom

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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."

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