Eskom welcomes proposed government intervention

Eskom says addressing its debt challenges is key to its turnaround strategy.

This after Finance Minister Enoch Godongwana announced in the Mid-Term Budget Policy Statement (MTBPS) that government will be taking over a portion of the power utility’s R400 billion debt.

“Addressing Eskom’s debt levels is a key component to the turnaround plan envisaged under the Department of Public Enterprises’ ‘Roadmap for Eskom in a Reformed Electricity Supply Industry’ and as noted in the MTBPS, a debt takeover by government (together with other reforms at Eskom and in the South African electricity sector) will ensure the long term financial sustainability of Eskom.

“The implementation of a debt relief solution and such reforms to the electricity sector will allow Eskom to undertake the much needed capital and investment programmes to ensure the stability and security of supply of electricity in the country without relying on further government bailouts,” Eskom said.

The power utility said it will consult with government and stakeholders in due course.

“As the Minister of Finance noted in the MTBPS, the government is working to finalise details of the proposed solution – including the quantum of proposed relief, the relevant debt instruments to be included and the method for effecting the transaction – and it intends to provide further details in its 2023 Budget.

“Eskom looks forward to working closely and collaboratively with the government in the coming weeks in order to develop a solution that ensures Eskom is restored as a financial independent, transparent and operationally efficient company.

“Eskom very much appreciates the ongoing support and cooperation of its investors and stakeholders and will engage and consult with them on the debt relief solution at the appropriate time,” the electricity supplier said.

Meanwhile, the company says it is continuing its work in the unbundling of its transmission division as part of its turnaround plan.

“The unbundling programme envisaged under the Department of Public Enterprises’ Roadmap remains of critical importance to the long term sustainability of Eskom’s business and to the supply and distribution of electricity in the country.

“[Accordingly], Eskom will continue to engage with the National Energy Regulator of South Africa

and the relevant creditors as applicable in order to satisfy those suspensive conditions and implement the Transmission unbundling as soon as possible,” Eskom said.