Finance Minister Tito Mboweni confirms R59 billion bailout of Eskom

Finance Minister Tito Mboweni confirms R59 billion bailout of Eskom

- Tito Mboweni has announced a bill that will allocate funds to Eskom

- He said that this will be done because the struggling SOE poses a major risk to the country and the economy

- However, the Finance Minister warned that this bailout would put a heavy burden on taxpayers

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Finance Minister Tito Mboweni has confirmed that Eskom will receive a R59 billion bailout.

He made the statement on Tuesday while presenting several plans to Parliament.

The bailout comes as part of the Special Appropriation Bill, which will allocate the funds to the SOE in two instalments between 2019 and 2021.

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Mboweni said that the decision for the bailout came as he believes that Eskom "presents the biggest risk to the fiscal framework" and its instability could have a "negative impact on the economy", according to The Citizen. 

He also said that, were Eskom to collapse, there would be a high likelihood of a "systemic failure" - which could potentially plunge the country into darkness for significant lengths of time, has gathered.

Additionally, Mboweni said that Eskom's debt (which stands at almost R500 billion) would need to be addressed and that the parastatal itself would need to be restructured. Mboweni added that he would be appointing a chief restructuring officer to look into the best ways to do this.

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While Mboweni's announcement may allay some fears about Eskom, the proposals are guaranteed to hit citizens in their wallets. Indeed, the Finance Minister said that the Eskom bailout "will come at a significant cost to the fiscus and to SA taxpayers".

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