Eskom To Receive Extra $4.2bn Allocation For Its Operations

Monday, July 22, 2019 / 2:00 PM /  Bukola Akinyele for Proshare WebTV / Header Image Credit: vocfm.co.za

Eskom, the South-African state-owned power utility company, has received an extra allocation of 59 billion rand ($4.24 billion), to enable it service operations over the next two years.  

According to information sourced from the South African National Revenue Fund, 26bn rand will be provided for the 2019/2020 financial year and 33bn rand for the 2020/2021 financial year.

The bill for approving the allocation to Eskom Power Utility Company is expected to be presented for discussion to the parliament by the Finance Minister Mr. Tito Mboweni on Tuesday, July 23, 2019.

It will be recalled that Mr. Mboweni approved a release of over 17bn rand to Eskom, to stabilize its operations following initial delays in accessing funds from China Development Bank.

The South African government is also mulling other options for financing Eskom, including a swap of the firm’s debt for government bonds or ring-fencing it in a special account.

Eskom is responsible for more than 90% of South Africa’s electricity but was forced to implement power cuts this year, failing to generate sufficient profit to meet its debt servicing obligations which now requires state funds to sustain operations.

The management of Eskom by the South African government has been described as critical to the nation’s economic stability, considering the huge debts and structural challenges of the state-owned utility company.

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