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Government’s Vodacom stake sold to fund Eskom

Eskom suffered a blow on Monday, as the National Energy Regulator (Nersa) rejected the power utility’s application to hike electricity tariffs by another 10 per cent.

The government might have had a premonition about Nersa’s rejection as a couple of days before the announcement, it said that it will fund Eskom with R23 billion in a bailout.

When the bailout announcement was made, the government was sketchy about where the money was coming from, saying only “before the end of June, you will know which assets [will be sold to fund Eskom].”

True to their word (well, they were off by one day) the National Treasury announced today that it will be selling its 14 per cent in Vodacom to the Public Investment Corporation (PIC) to fund a part of the bailout.

“As previously indicated, the proceeds from the sale will be used to finance the R23 billion allocation to Eskom,” The Treasury said in its statement. “This gives expression to the commitment made in the 2015 Budget and the 2014 Medium Term Budget Policy Statement that funding of state owned companies would be in a deficit neutral manner,”

It said that the government considered a wide range of options when it came to selling off assets, but Vodacom seemed the best option.

“The sale of the Vodacom stake was the most viable option for ensuring that government was able to swiftly realise the proceeds and inject equity into Eskom to bolster the utility while simultaneously ensuring government was still able to deliver on its strategic objectives,” it said

[Image – Charlie Fripp]

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