Johannesburg, South Africa/Bloomberg

Economy

South Africa must increase funding for Eskom, says National Treasury Director

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In February, the government approved a ZAR 69 billion ($4.6 billion), three-year bailout for the debt-laden company, but both Finance Minister Tito Mboweni and Eskom Chairman Jabu Mabuza have since indicated that will not be enough.

Monday 10, June 2019

(Bloomberg) --South Africa National Treasury Director General said that the government has no option but to increase financial support for Eskom Holdings even while pushing for reforms at the stricken state-owned power utility.

Dondo Mogajane, the National Treasury Director General, said, “That is a decision that we will have to finalise, but we know we do not have a choice, its an issue of how much and when.”

Eskom is straining under more than $30 billion of debt, more than half of which is guaranteed by the government and there is been speculation that the state may have to take that over via a conversion into government bonds.

Mogajane said that over the next few weeks the government will share firm views as to what kind of support we’re talking about and when and how we’re going to synchronise that milestone that we’re looking for.

In return, the Director General said that the state would be looking for changes from Eskom.

While further support for Eskom is likely to put pressure on South Africa’s fiscal balance, credit-rating companies have already factored in Eskom’s contingent liabilities, added Mogajane.

 

TAGS : Eskom, President Cyril Ramaphosa, Tito Mboweni

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