'Debt for Climate Swap': Masondo Asks for Eskom's R146 Billion Debt to Be Forgiven

'Debt for Climate Swap': Masondo Asks for Eskom's R146 Billion Debt to Be Forgiven

  • Deputy Finance Minister David Masondo has made a proposal he believes will solve Eskom's debt crisis
  • Masondo suggests that Eskom's enormous debt should be forgiven by investors and creditors in exchange for the power utility generating renewable energy
  • Masondo stated that with debt forgiveness, Eskom would be able to close down its coal-powered plants and meet climate targets

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JOHANNESBURG - Eskom's investors are being asked to forgive the power utility's R146 billion sovereign debt by the Deputy Minister of Finance David Masondo.

Masondo proposes that the debt should be written off in exchange for Eskom meeting its climate targets. According to BusinessLIVE, Masondo has written a proposal dubbed 'Debt for Climate Swap' in which he suggests that Eskom's large debt should be forgiven by new and existing creditors.

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Debt for climate swap proposal, Eskom's debt, Deputy Finance minister David Masondo
Deputy Finance Minister David Masondo proposes that Eskom's R146 billion debt should be forgiven by investors. Images: Dwayne Senior
Source: Getty Images

Masondo explains that for Eskom to meet its climate targets and be able to generate renewable energy, the power utility would still need to borrow another R400 billion and that would further plunge the state-owned entity into debt.

In exchange for the debt being forgiven, Masondo explains that the South African government would pledge an equal amount as an equity investment into Eskom. As guarantees for future borrowing, Eskom would have to retire coal-fired units., according to Fin24.

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Masondo added that some of the funds invested could be used to help communities cope with the effects of coal plant closures.

On July 30, Masondo initially mentioned the notion of forgiveness as a solution to Eskom's debt crisis. He didn't go into much detail at the time of his initial proposal.

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Eskom offers Soweto residents R5.3 billion discount, R7.5 billion still outstanding

Briefly News previously reported Eskom has offered to slash the R12.8 billion owed by Soweto residents by a whopping R5 billion.

This would effectively leave the residents still owing the power utility R7.5 billion. Soweto is among the top 20 municipalities in debt to Eskom.

The Soweto Electricity Crisis Committee believes that the figures presented by Eskom are rough estimates. The committee wants Eskom to write off the entire amount, according to eNCA.

Eskom justified the discount by explaining a large portion of the R5.3 billion was prescribed debt that was writing off and also the interest that had increased over the principal amount. The power utility has offered to give the municipality a debt management strategy and work with residents to slow the growth of the debt, according to IOL.

Source: Briefly.co.za

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