R69 Billion Set Aside Over Three Years To Reconfigure Eskom

The Finance Minister's Medium Term Budget Policy Statement makes a frank assessment of the trouble the country is in. PICTURE: GCIS

The cash-strapped power utility will get R69 billion over the next three years but under strict conditions.

Finance Minister Tito Mboweni has unveiled plans to help Eskom restructure, deal with its debt and do urgent maintenance to secure the supply of electricity. The cash-strapped power utility will get R69 billion over the next three years but under strict conditions.

Mboweni’s forecast slower growth and revealed a larger than expected revenue shortfall of more than R15 billion – due to the poor economy and weakened capacity at SARS.

There’ll be no increases in personal or corporate income tax – but fuel levies will increase by about 30 cents a litre and a new carbon tax will kick in. Presenting his R1.8 trillion budget Minister Mboweni says the country’s recovery from last year’s recession will be slower than expected – but steady.

“It is expected that real GDP growth in 2019 will rise to 1.5% and then strengthen moderately to 2.1% in 2021.”

He’s rejected Eskom’s plea for the state to take on any of its debt but says the cash-strapped power utility will get R69 billion – R23 billion a year over the next three years.

Mboweni says this support for Eskom comes with conditions, including the appointment of a chief reconfiguration officer who will oversee the parastatal’s unbundling.

Mboweni’s moved to curb government spending by just over R50 billion over the next three years, about half of this through measures to rein in the government’s soaring wage bill. However, the budget deficit will be higher over the next few years.

Eskom, responsible for producing 95% of the country’s electricity, is mired in debt and inefficiencies. Recent days of load-shedding have left the economy reeling – and the 96-year-old giant parastatal is now considered a threat to national security, because if it crashes and burns, so does the economy.

Meanwhile, South African Airways (SAA) has been waiting on an announcement from Mboweni on when it will receive the rest of the R21 billion government bailout it requested.

The government paid the airline R5 billion of the sum in 2018. SAA has also managed to secure a cash injection of R3.5 billion from banks to help it stay afloat until June.