Parliament cracks Eskom whip, demands stringent conditions for R59bn bailout
Companies / 19 September 2019, 2:00pm / Siyabonga Mkhwanazi
CAPE TOWN – Parliament has demanded stringent conditions for the R59 billion bailout to be given to Eskom ahead of the approval of the Special Appropriations Bill.
The government has issued guarantees of more than R570bn in the past few years and Eskom carries most of the guarantees.
The standing committee on appropriations on Wednesday demanded that Eskom must give them a full register of non-core assets that would be disposed.
In the presentation to MPs, Eskom has only mentioned its R10bn loan book, which will be sold, but the committee want the power utility to list all its non-core assets.
Chairperson of the committee, Sifiso Buthelezi, said they will not be security guards for the R59bn, but Eskom must be able to account for its funds.
“We don't want to sit here and be the security guards of the money.
"We encourage the National Treasury to look at other creative ways to fund Eskom and other state-owned entities and not always the fiscus.
"It can't be business as usual. There are other ways,” said Buthelezi.
Ashor Sarupen of the DA said that the government must be tough on the bailout.
“In terms of all we agreed on as the committee is that the conditions of this bailout must be stringent.
"We cannot give Eskom a blank cheque.
"The Parliamentary Budget Office told us that at this stage we are not headed for the International Monetary Fund because the bonds are purchased on the capital markets,” said Sarupen.
ANC MP Masarona Mathafa said Eskom must report regularly to Parliament on how it was using the money allocated.
He said that it would be appropriate for the power utility to report every quarter so that MPs could track on how the funds were used and if they were used correctly.
Mathafa said Eskom could not be be sustained in its current form.
Credit agency Moody’s in July put South Africa on notice that it might downgrade the country following the further bailout of Eskom, which is likely to widen the government's debt-to-gross domestic product (GDP) and put further constraints on the already burdened fiscus.
Moody’s, which is the only one of the major rating agencies that still has the country's sovereign debt above junk status, slammed the government's R59bn support for the power utility over the next two years in the absence of a credible plan to stabilise it.
Moody’s said if the additional support for Eskom was not compensated for, the country’s fiscal deficit would widen to 5.7 percent of GDP this year and 5.6 percent next year.