Eskom Debt Relief Bill passed

The Eskom Debt Relief Bill was passed by Parliament’s Standing Committee on Appropriations after Finance Minister Enoch Godongwana announced the R254 billion debt relief during his Budget Speech in February.

However, this relief comes with conditions that include that Eskom is not allowed to take on any new debt for the next five years and cannot borrow in the capital markets.

The R254 billion will cover 60% of Eskom’s debt, while its overall debt is R422 billion. The first tranche of debt relief consists of R184 billion, Eskom’s entire medium-term three-tranche debt settlement of R78 billion for 2023/24, R66 billion for 2024/25 and R40 billion for 2025/26.

This total debt relief will be in the form of loans that will be converted into Eskom’s ordinary shares issued to government as approved by the minister of finance in each fiscal year.

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The second one is a direct take-over of up to R70 billion of Eskom’s loan portfolio in 2025/26. These funds are classified as “direct charges” against the National Revenue Fund, meaning they are designated expenses that will be drawn directly from the country’s revenue.

Public enterprises minister, Pravin Gordhan, recently said it is, therefore, critical that Eskom’s continues with the saving programme and they drive efficiencies internally to reduce its cost base.

Eskom management told the committee earlier this week, that the relief will give Eskom space to invest in generation capacity.

The EFF abstained from voting, while the DA submitted an objection. The bill will now be debated in the National Assembly.