Godongwana lays down the law for Eskom

Amidst a record year of load shedding and Eskom’s poor financial performance, Finance Minister Enoch Godongwana has tabled a new Bill to help counter the dire state of Eskom’s finances.

South Africa has experienced more power cuts in the year to September than the whole of 2022, with the Outlier saying that the country has experienced over 6,074 hours of load shedding this year alone.

Although the medium-term outlook for load shedding has improved due to Eskom’s improved performance and the use of alternative power systems by households and businesses, the embattled utility still faces a massive revenue.

In the 2023 financial year, Eskom recorded its biggest-ever loss of R24 billion as losses due to criminality skyrocketed, and wealthier customers transitioned to alternative power sources.

Amidst the utility’s dire financial performance, Godongwana said that the R254 billion would be given to Eskom as debt relief during the 2023 budget.

This was done to ease pressure on the company’s balance sheet and free it to invest in transmission and distribution infrastructure.

In addition, over R330 billion of Eskom’s debt was already government-guaranteed, and taking over this debt would reduce fiscal risk and enhance long-term fiscal sustainability.

This debt was given strict conditions to ensure that public funds were used appropriately. A key condition is that the loan would not be converted to equity if Eskom violated the conditions.

In the Medium-Term Budget Policy Statement (MTBPS), Godongwana tabled the Eskom Debt Relief Amendment Bill, which improves the enforceability of the conditions as part of the debt relief agreement.

“It provides for the payment of interest by Eskom on amounts advanced as part of the debt relief loan; The Amendment also provides for the reduction of the amount of debt relief available to Eskom in the event that the entity does not comply with the National Treasury conditions,” Godongwana said.

“These principles and strict conditionalities, greatly enhanced by the Amendment, are a key part of how we will deal with Eskom and all other state-owned entities to avoid a repeat of the mistakes of previous bailouts.”

Read: Load shedding is getting better – but it’s not enough