R59bn bailout for cash-strapped Eskom draws the ire of opposition parties
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Cape Town - Opposition parties have slammed the government’s bailout of Eskom, saying state-owned entities (SOEs) were a financial strain on the fiscus.
But ANC MPs and Finance Minister Tito Mboweni on Tuesday defended the Special Appropriations Bill, which made provision for the R59billion bailout and said it was necessary. The bill was passed by the National Assembly on Tuesday.
Mboweni had announced the bailout earlier in the year and the standing committee on appropriations had to process it.
Chairperson of the committee Sfiso Buthelezi said the bailout of Eskom was necessary because if the power utility defaulted on its loans it would cause a cross-default on all SOEs. The entities owe creditors billions of rand.
Buthelezi said the protection of Eskom was important for the country.
However, EFF deputy leader Floyd Shivambu said giving money to Eskom was like throwing money into a bottomless pit.
He said in 2015 then finance minister Nhlanhla Nene gave Eskom a bailout of R23bn.
Nene later converted Eskom’s R68bn debt into equity, but the problems at the power utility remain intractable.
“You’re now asking us to transfer R59bn to Eskom. The EFF does not agree with the withdrawal of money from the National Revenue Fund to throw it into a sieve called Eskom,” said Shivambu.
The DA’s Ashor Sarupen said Eskom had incurred massive losses and the government continued to give it bailouts.
He said the utility was holding government to ransom and the problems at Eskom would continue.
“In its present form, this one-page bill will hand R59bn in ransom money over from the fiscus to Eskom over two years, in addition to the R23bn a year already allocated to Eskom for the next decade. I call it ransom because it’s unconditional - the bill allows the finance minister to transfer money to Eskom without any pre-conditions to be met,” said Sarupen.
He said the DA had proposed amendments to the Special Appropriations Bill, including that Eskom executives not be paid bonuses.
Steve Swart, of the ACDP, said 15 years ago Eskom was the best utility in the world. At that time Eskom’s cash reserves were between R20bn and R40bn, said Swart.
He added that now, Eskom was a debt-laden utility struggling to stay afloat and it could not survive without government bailouts.
Nqaba Kwankwa, of the UDM, said Eskom was in a deep financial crisis.
He said the unbundling of the power utility “comes out of the manuals of the International Monetary Fund and the world for the privatisation of Eskom”.
Kwankwa said unions had every right to be afraid that the company would be privatised.
President Cyril Ramaphosa has insisted that Eskom would not be privatised. This is despite proposals to unbundle it into three separate entities for generation, transmission and distribution. Ramaphosa is expected to release a paper on Eskom soon.
Eskom chairperson Jabu Mabuza told Parliament three weeks ago that they would decommission some of the power stations because they were more than 37 years old and had reached their lifespan.
However, he said there was a plan for the transition after the shutting down of these plants.
Minerals and Energy Minister Gwede Mantashe said last week, during the launch of the Integrated Resource Plan, that coal would remain the key source of energy in the country.
Government is pursuing an energy-mix policy which includes coal, hydro, nuclear and renewable energy.
Meanwhile, the power utility has said that the probability of load shedding is low for the week but the system remains extremely constrained and vulnerable.
It said any unexpected shift, such as unplanned breakdowns due to the vulnerability of the system, could result in load shedding at short notice.
Eskom said its recovery teams continued to “work tirelessly” to return some of its generating units from planned and unplanned maintenance while “we are currently using some of our emergency reserves to minimise the probability of load shedding”.
Last week, the power utility announced that stage 2 load shedding would be implemented due to a shortage of capacity. “We will continue to keep South Africans informed about the status of the electricity system and our recovery efforts. Eskom would like to thank customers for their patience and support in reducing demand by using electricity sparingly,” the utility said.