The financial crisis Eskom is enduring has become a national debt problem. On Tuesday, 23rd of July, minister of finance, Tito Mboweni has unveiled a second, multi-billion rand bailout plan in five months, which would see the government increase borrowing as well as taxes. Tito Mboweni, tabled a special appropriation bill for Eskom which would see them benefit from an additional R59bn cash injection.
This bill provides for an additional amount of funds to be made available to the department of public enterprises to assist Eskom in meeting its financial commitments. The bill allows for R59bn to be appropriated from the National Revenue Fund to the DPE (Department of Public Enterprises) – R26bn of which is allocated for the current financial year (2019/2020) and R33bn is allocated for the following financial year (2020/2021).
Minister of Finance Tito Mboweni
Mboweni further told the National Assembly that the announcement of a Chief Restructuring Officer (CRO) at the state-owned power utility is imminent. Depending on the finalisation on consultations with Public Enterprises Minister Pravin Gordhan, the CRO could be announced very soon.
Mboweni told assembly that the current financial situation at Eskom is extremely serious.
“Eskom is not financially sustainable based on its current high levels of debt and its inability to generate sufficient revenue to meet its operational and capital obligations, which exposes the entity to high levels of liquidity and balance sheet risks.” – Tito Mboweni
The bill will next be referred to the Standing Committee on Appropriations for consideration. Once the bill is passed by the National Assembly it will be referred to the National Council of Provinces for consideration.