- The 2019 Budget Speech today heard that Eskom has been allocated a R69 billion financial support package over the next three years by Treasury to help pay it's debts
- Finance Minister Tito Mboweni is adamant that this is does not mean the state is taking on the power utility's debt
- However, Mboweni is adamant that this aid will come with strict conditions to adhere to
Today during the 2019 Budget Speech heard that a R69 billion financial support package over the course of the next three years from Treasury.
During his first Budget in Parliament today the minister was adamant that this should not be seen as a bailout from the government.
This is significantly less than the proposed R100 billion package Eskom was expected to ask for. Mboweni likened this support to that of a private company embarking on a capital raising exercise though a rights issue. In this particular instance the shareholder is the state, who would be providing a liquidity injection.
The finance minister revealed that this financial aid comes with very strict conditions:
"Pouring money directly into Eskom is like pouring water into a sieve. I want to make it clear: the national government is not taking on Eskom's debt. Eskom took on the debt, it must ultimately repay it. We are setting aside R23bn a year to financially support Eskom during its reconfiguration,"
According to News24, the package will be closely monitored by Moody's Investor Service, a major ratings agency.
As a part of the conditions, a 'Chief Reorganisation Officer' would be appointed by Mboweni and Minister Pravin Gordhan.
This officer will be working with the board at the utility and management to ensure the recommendations of the Presidential Task Team will be carried out.
Briefly.co.za reported earlier that President Cyril Ramaphosa had appointed the panel of experts to advise the state on interventions needed to save Eskom.
This package will also serve to support the proposed restructuring of Eskom into three separate entities, namely- generation, transmission and distribution.
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