According to the National Treasury Director General Dondo Mogajane, South Africa doesn’t have a choice anymore when it comes to Eskom and will need to increase financial support, whilst pushing reforms at the state-owned power utility.
In February, the company laden with debt was given a three-year bailout of R69 billion. However, Eskom chairman Jabu Mabuza and the finance minister Tito Mboweni have said that this just won’t be enough.
In an interview meeting of the Group of 20 finance ministers and central bank governors in Fukuoka, Japan Mogajane said the decision is to be finalised, but there isn’t a choice. Its an issue of how much and when.
Eskom is taking pressure as they continue to be in more than $30 billion of debt, where more than of this was guaranteed by the government. There is rumour that the state may have to take that over by a conversion into government bonds.
Mogajane went onto say that in the next few weeks, the government will be sharing views on the kind of support and when as well as how they are going to synchronise the milestone that they are looking for.
The director general said in return, the state would be looking for changes from Eskom. Their tax revenues are money that should have been meant for other things.
Additional support for Eskom will probably put pressure on South Africa’s fiscal balance. Eskom’s contingent liabilities have already been factored in by credit rating companies according to Mogajane.
Article Source: https://www.moneyweb.co.za/news/south-africa/south-africa-has-no-choice-but-to-increase-funding-for-eskom/