With the budget speech happening in local Parliament today, South Africans were looking to minister Tito Mboweni for some sort of reprieve from the ailing economy and perhaps hope for Eskom.
The latter is at the top of many people’s minds considering we’re looking back at a rough week of load shedding across the country.
The finance minister addressed the matter of Eskom directly in his speech harking back to the proposal which would see Eskom split into three, independent components – you will recall President Cyril Ramaphosa touched on this during SONA.
“This will set the electricity market on a new trajectory, and allow for more competition, transparency and a focused funding model,” Mboweni said.
“Pouring money directly into Eskom in its current form is like pouring water into a sieve,” he added.
The minister has said in his speech that government is setting aside R23 billion a year to assist Eskom in this proposed shake up. This money is not be seen as government taking on Eskom’s debt the minister cautioned, and it must ultimately be repaid.
The support is expected to continue for three years and amounts to R69 billion.
There is also a catch.
“The fiscal support is conditional on an independent Chief Reorganisation Officer (CRO) being jointly appointed by the Ministers of Finance and Public Enterprises with the explicit mandate of delivering on the recommendations of the Presidential Task Team. We will make announcements in this regard in the coming weeks,” said Mboweni.
As regards other state owned enterprises, Mboweni is taking a strict line with all of them.
“We must tighten the guarantee rules. If a state-owned enterprise applies for a government guarantee for operational purposes, it will be required to appoint a CRO in concurrence with the National Treasury and its bondholders. The CRO will undertake a full operational and financial review,” the minister said.
“When banks need state support, we appoint a curator. When provincial and municipal finances are in disarray, government can take over the running of the administration. These rules should also apply to all SOEs.”
You can find the full Budget Speech for 2019 here.