The Minister of Finance Tito Mboweni is confronted with Eskom’s rising costs and falling revenue.
Eskom will be at the top of the agenda when minister Mboweni unpacks his 2019 budget speech on Wednesday. The state-owned power entity is in a serious financial crisis and it was reported that it could run out of money by April.
During his State of the Nation Address (SONA), President Cyril Ramaphosa announced the unbundling of Eskom into three separate entities.
Meanwhile, Mboweni is expected to give more details as to how this will be done. Analysts and international rating agencies will be watching closely to see how much money the government will give Eskom to keep its lights on.
Last week, Moodys‘ rating agency said in its report that the government’s plan to split struggling state power company Eskom into three entities does little to address the company’s financial difficulties.
“The move paves the way for a more transparent group with more clearly allocated revenue and cost between business segments,” Moody’s said, adding that Eskom remained a significant risk to the country’s fiscal strength.
“However, in and of itself it does little to address Eskom’s financial challenges,” Moody’s added.
The finance minister is confronted with Eskom’s rising costs and falling revenue. The minister will have to explain to South Africans where and how he will find the money to save Eskom.