Lucky Day For Eskom As It Gets A Bailout

One step ahead of bailing out the embattled power utility as it gets a transfer of R5 billion from the finance ministry.

The R5 billion transfer falls within the R23 billion a year bailout the South African has government has agreed to give Eskom over the next three years which is set to  avert a default by Eskom on its obligations.

The finance ministry report, dated 16 April and signed by Finance Minister Tito Mboweni, also said Eskom could need another tranche of government money before the end of the month. According to the report, the government originally anticipated giving Eskom the bailout money between August and October this year.

Eskom supplies more than 90 percent of the electricity in Africa’s most advanced economy but is choking under a mountain of debt which it struggles to service.

The 5 billion rand ($355.5 million) transfer, authorised on April 2, falls within the 23 billion rand a year bailout the South African government had already promised to give Eskom over the next three years.

But by the end of March, Eskom was experiencing difficulties raising funding, the report said.

“In order to avert a default by Eskom on its obligations, on 2 April 2019, the Minister of Finance … authorised the payment of 5 billion rand,” the report said. It added that Eskom could need another government cash injection before the end of the month.

A finance ministry spokesman confirmed that Mboweni had authorised the transfer of money to Eskom.

Early this month, Public Enterprises Minister Pravin Gordhan said the highest levels of government were considering a variety of additional financial support measures for Eskom, beyond the bailout announced in February.

Energy experts say the bailout is insufficient to make Eskom financially sustainable in the long term.