Government could take over as much as two-thirds of Eskom’s debt mountain, finance minister Enoch Godongwana announced in his mid-term budget speech on Wednesday.

“To ensure Eskom’s long-term financial viability, government will take over a significant portion of the utility’s R400-billion of debt,” Godongwana told MPs.

“While the selection of the relevant debt instruments and the method of effecting the relief is still to be determined, the quantum is expected to be between one-third (R133-billion) and two-thirds (R266-billion) of Eskom’s current debt. Eskom is indebted to the tune of about R400-billion.

“The debt takeover, once finalised, together with other reforms, will ensure that Eskom is financially sustainable,” the finance minister said.

“The programme will allow Eskom to focus on plant performance and capital investment and ensure that it no longer relies on government bailouts.

Importantly, the programme will include strict conditions required of Eskom and other stakeholders before and during the debt transfer,” Godongwana said.

“These conditions will address Eskom’s structural challenges by managing its costs, addressing municipal and household arrears due to the utility, and providing greater clarity and transparency in tariff pricing.”

The conditions attached to the debt reduction plan will also be informed by a national treasury-led “independent review of Eskom’s operations, in particular the performance of its generation fleet”.