MTBPS: National treasury to take on two thirds of Eskom debt

Treasury plans to assume between one to two thirds of Eskom’s R400 billion debt, with a debt relief programme.

Further details of the programme, which will be finalised following consultations with all relevant stakeholders, will be announced in the 2023 Budget.

Debt relief not enough

This will allow Eskom to implement planned capital investment and critical maintenance, and ensure that the company no longer relies on government bailouts. 

But, according to government, debt relief alone will not solve Eskom’s problems. Government says that its plans for Eskom’s debt is, therefore, just part of a comprehensive approach.

“While the utility has made progress in unbundling, which remains critical to its long-term sustainability, several underlying challenges must be addressed,” Finance Minister Enoch Godongwana said in a statement.

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The National Treasury is leading a process to finalise a debt relief programme designed to restore Eskom to efficiency and financial sustainability.

Final figures still to be determined

The specifics of the programme, including the selection of the relevant debt instruments and the method of effecting the relief, are still being finalised – though Godongwana did allude to the fact that the initial work around the programme is officially done.

He said that final and more precise figures around the amount that will be allocated will be communicated.

The programme will include strict conditions required of Eskom and other stakeholders before and during the debt transfer. These conditions will address Eskom’s structural challenges by managing its costs, addressing arrears due to the utility, and providing greater clarity and transparency in tariff pricing.

In addition, the conditions will be informed by an independent review of Eskom’s operations.