South Africa

ESKOM

Mboweni confirms Eskom’s R150bn bailout, amortised over a decade

Finance minister Tito Mboweni delivers his 2019 budget speech in Parliament on February 20, 2019 in Cape Town, South Africa. Mboweni, a former SA Reserve Bank governor delivered his first annual budget speech as minister of Finance amid socio-economic and political issues in the country. (Photo by Gallo Images / Jeffrey Abrahams)

Finance Minister Tito Mboweni on Thursday confirmed that R23-billion annually over the next 10 years had been pencilled in for Eskom — that’s R150-billion amortised over the decade — as Public Enterprises Minister Pravin Gordhan echoed this number a couple of hours later during the parliamentary debate on Eskom. Officially, the Budget had announced support of R23-billion for each of the next three years, with conditions linked to the power utility’s unbundling.

Daily Maverick had already confirmed on Wednesday with National Treasury that Eskom actually could expect the support of up to R150-billion, which is R23-billion a year amortised over the next decade. It had become clear in Annexure W3 of the Budget documentation that the R23-billion a year over each of the next three years was not the be-all and end-all of government support for Eskom.

In the run-up to Wednesday’s Budget the power utility had pitched for a debt swap by which government would take on R100-billion off its R419-billion debt. That didn’t happen as the government decided on a straight cash injection of R23-billion a year, definitely for three years — and pencilled in for a decade – but depending on factors such as the soon-to-be-announced new electricity tariffs and savings from the restructuring of Eskom.

Finance Minister Tito Mboweni and National Treasury officials were briefing Parliament’s finance and appropriations committees on Thursday when the R150-billion support level emerged officially.

It fell to National Treasury Budget Office acting Deputy Director-General Ian Stuart to explain the numbers in Wednesday’s Budget.

We had to make a decision. One choice is to say nothing. We felt it was not credible,” said Stuart. “We felt the prudent thing is to put in some numbers… We had to signal our support for Eskom immediately by pencilling in the numbers.”

But the calculations right off the bat had been about R150-billion, the hole in Eskom’s balance sheet. And R150-billion amortised over 10 years is R23-billion a year, or as the Budget announced, R69-billion to the 2021/22 financial year.

That only the first three years of that planned decade-long financial commitment was announced in the Budget is a sign of how the fundamental and deep-seated problems of Eskom is a poser that reaches across government.

When asked whether politics and pressure to minimise the negative impact of the extent of Eskom’s financial needs lay behind the Budget announcement, Mboweni told Daily Maverick it definitely wasn’t about politics — and the numbers came from National Treasury.

While Gordhan, in wrapping up the Eskom debate in the House, charted a step-by-step path towards the power utility’s unbundling, it is unlikely to be as uncontested as the minister argued.

The National Union of Metalworkers of South Africa (Numsa) called on Thursday for “a national shutdown to defend Eskom”, arguing that the unbundling of the power utility was about its privatisation. DM

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