On Tuesday finance minister Tito Mboweni announced that a special appropriation bill will grant Eskom additional funding.
The funding allows the Department of Public Enterprises to assist Eskom with meeting its financial obligations. This will be made possible through the National Revenue Fund where R59 billion will be set aside for the matter.
Of that figure, R26 billion will be allocated for the current financial year while the other R33 billion is earmarked for the next financial year.
“Although Government has committed R23 billion to be allocated to Eskom over the next 3 years in the current fiscal framework, Eskom’s funding plan is dependent on Eskom raising additional finance from the market, which in turn requires Eskom to be a going concern. It is therefore important to note that the proposed financial support for 2019/20 and 2020/21 financial years addresses the going concern status and enables Eskom to honour its obligations,” Mboweni said during his address.
The minister reiterated that the utility cannot go on like this and that if the utility doesn’t execute a turnaround, the consequences would be dire.
“Without major changes to Eskom’s business model, the company will not be financially sustainable and may not be able to ensure security of electricity supply beyond the medium-term, with significant consequences for the economy. The frequency of the power shortages has risen in recent years, and government needs to act boldly and decisively. We are therefore committed to a significant reform agenda for the entity,” said the minister.
The forthcoming chief restructuring officer who will “be appointed shortly” has a mammoth task on their hands.[Source – Polity]