Eskom will lose a portion of the debt relief it was previously allocated by national treasury after it failed to meet the attached conditions.
Government will transfer R76-billion and R64.2-billion in the current and next fiscal year, respectively, to Eskom, according to the budget review published by treasury on Wednesday.
“Transfers in each of these years are R2-billion lower than projected as a result of the entity’s failure to conclude disposal of the Eskom Finance Company, as stipulated in the debt-relief conditions,” it said.
The decision shows treasury is holding a firm line on only providing relief to debt-stricken state companies if they meet strict criteria, including implementing recovery plans and selling non-core assets.
The government granted Eskom a R254-billion debt-relief package last year to help the utility strengthen its financial position, and repair and upgrade power plants in order to end daily outages that have crimped economic growth.
Treasury is working with the International Finance Corporation, the World Bank’s private lending arm, on “short-term options for off-balance sheet financing” to accelerate private-sector investment in South Africa’s transmission network “without negatively affecting Eskom’s balance sheet and the fiscus”, according to the budget review.
A pilot project will be implemented to test market appetite for the plan, with a request for proposals expected by the end of July, it said.
Transnet
Treasury made no mention of a report by German consultants Vgbe Energy that made recommendations on how Eskom’s coal-fired power plants can improve on operational inefficiencies. Godongwana previously said the proposals would be actioned after being considered by the utility, which received the report late last year.
Separately, treasury said it’s granted state port and freight rail operator Transnet approval to use only R14-billion in debt guarantee — out of a total R47-billion that it was granted late last year — to pay off maturing loans in the four months to March.
Read: Eskom lost R7.5-billion in three months
“This is to ensure that Transnet implements the short-term initiatives in the recovery plan and aligns it with the cabinet-approved road map for freight logistics,” according to the budget review. — S’thembile Cele, with Rene Vollgraaff, (c) 2024 Bloomberg LP