National Treasury's cash injections to Eskom to the tune of R23 billion a year to help it cover its debt are likely to continue for a decade, Finance Minister Tito Mboweni told MPs on Thursday. Photo: Reuters

PARLIAMENT – National Treasury's cash injections to Eskom to the tune of R23 billion a year to help it cover its debt are likely to continue for a decade, Finance Minister Tito Mboweni told MPs on Thursday.

"It will be for 10 years, so R230 billion. I think in the book we put R69 billion," Mboweni said in a briefing to Parliament's joint finance committee the day after he tabled the 2019 national budget.

In his Budget Speech, the minister announced that the ailing power utility would get R23 billion a year for the next three years.

National Treasury's acting deputy director general for the budget office, Ian Stuart, said officials had arrived at a decision that Eskom would require R150 billion in support to its balance sheet, and if that figure were amorticized over ten years it resulted in annual payments of R23 billion.

Stuart added that the calculations on support to the struggling power utility had been difficult because of the variables involved, including tariff increases and fluctuations in electricity demand.

He suggested that the picture may change in the outer years but said the Treasury decided that it had to provide figures in the budget to satisfy international ratings agencies' preference for maximum transparency.

"There are a lot of people working on this, looking at the numbers … In a sense a lot of this work still needs to be done, but we had a major decision to make in putting together the budget.... we decided we must be as transparent as possible."

Finance director general Dondo Mogajane conceded that Eskom was the cause of the worsening outlook for South Africa debt to GDP ratio. It had been forecast to stabilise at just below 60 percent by 2023 but was now expected to be just over the 60-percent mark at that point.

Mboweni has described discussions with ratings agencies in the run-up to the budget as "very, very difficult" as Treasury weighed the correct response to the Eskom crisis.

Moody's, the only of the three major ratings agencies that has kept South Africa's sovereign debt at investment grade, is due to review its decision at the end of May.

African News Agency (ANA)