Ramaphosa signs bill granting Eskom R59bn

President Cyril Ramaphosa delivers his State of the Nation address on June 20, 2019, in Cape Town. (Jeffrey Abrahams/GALLO)
President Cyril Ramaphosa delivers his State of the Nation address on June 20, 2019, in Cape Town. (Jeffrey Abrahams/GALLO)

President Cyril Ramaphosa has assented to a special appropriation bill which will see Eskom get an additional R59bn in the next two years.

According to the circular of announcements and tablings from Parliament, issued on Monday, the president signed the bill on November 20.

The R59bn allocation has been accounted for in the medium-term budget policy statement, tabled by Finance Minister Tito Mboweni in October.

Overall Treasury has allocated R230bn to Eskom over the next 10 years, but has elected to bring forward some of these funds in order to help Eskom maintain a going concern status. Eskom will use the funds to service its debt and interest costs, Fin24 previously reported.

In the February budget, government had initially allocated Eskom R69bn for the next three years, or R23bn in each year. The special appropriation will see Eskom get an additional R26bn in 2019/20 and R33bn for 2020/21.

Treasury also plans to allocate an additional R10bn to power utility for 2021/22, but there will be a separate appropriation process for this.

In the medium-term budget policy statement, Mboweni did not provide any debt relief options to Eskom, which has a debt burden of R440bn or 15% of GDP. The minister is awaiting to see if there is any progress in reforms at the power utility.

"Once I am convinced that the Eskom board and management has made an irrevocable commitment to implement government’s decisions and there is enough progress, we will negotiate the appropriate size of debt relief," Mboweni said at the time.

The chief reorganisation officer, Freeman Nomvalo, is exploring different debt options and will make recommendations in his final report on Eskom's restructure to be released by year end.

Deputy Director General, Makgola Makololo told Parliament's portfolio committee on public enterprises last week that while the market wants to see a plan for debt relief, Eskom's unbundling or restructuring must tie in with the overall restructuring of the energy sector, which is being prioritised.

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