Government’s total guarantee amount is expected to increase from R513.1bn at the end of March last year to R661bn at the end of next month, mainly due to an additional R145.8bn in guarantees issued to Transnet.
This is according to minister of finance Enoch Godongwana’s 2026 budget speech.
Godongwana tabled his 2026 budget speech during a joint sitting of parliament in Cape Town on Wednesday afternoon.
Addressing the media during the budget lock-up ahead of the speech, Godongwana said any concerns around the unbundling of Eskom and where the transmission assets will rest after the company is broken down were settled by President Cyril Ramaphosa’s State of the Nation Address earlier this month.
“That issue is settled. The transmission company will be [separate]. That is what the president said. As I understand it, no other person has authority over that policy [other than the president]. The president has closed that matter.
“What he has done is that he detailed the implementation through a technical committee under Necom. Closed it! The matter is closed. There is no talk of the matter not being settled. The matter is settled. Anyone who says it is not settled is making a mistake.”
The Budget Review said as of March 31, the government’s commitment to the Renewable Energy Independent Power Producer Programme is expected to be R303.1bn.
“The value of signed projects, which represents government’s exposure, is expected to be R244.3bn by 31 March 2026, declining to R189.7bn by 2028/29. Public-private partnership exposure arises mainly from early termination of contracts and is expected to decline to R3.3bn in 2025/26, narrowing to R1.2bn in 2028/29.”
The Budget Review said after subtracting R50bn from the Gold and Foreign Exchange Contingency Reserve Account (GFECRA), R25bn for each year over 2025/26 and 2026/27, R31bn will be transferred to the National Treasury to lower the gross borrowing requirement, while R23bn will be allocated to the Reserve Bank to cover the liquidity management costs of redistribution.
“The public environment strengthened in 2025/26 as easing monetary conditions, improved investor confidence and stronger sovereign risk profile lowered borrowing costs. Improved revenue outcomes and reduced redemptions narrowed the budget deficit and gross powering requirement, easing financing pressures.”
The Budget Review said an increase in exposure reflected a net drawdown of R34.2bn on the Transnet guarantee, partially offset by net repayments by Eskom of R18.8bn and by Sanral of R4.6bn.
“Eskom constitutes 73.6% of total guarantee exposure, and Transnet 17.3%. The volume of exposure to Eskom has declined as government’s debt-relief arrangement has been implemented. However, given the weight of Eskom and Transnet in the guarantee portfolio, their guarantees remain a significant fiscal risk.”
The Budget Review said four additional electricity generation projects were announced under the seventh bid window of the Renewable Energy Independent Power Producer Programme to add 890MW, and bringing the total bid window capacity to 3940MW.
Transnet’s public-private participation initiatives were also gathering pace, with the utility signing a 25-year deal with a private partner to upgrade and develop the Durban Container Terminal Pier 2.
TimesLIVE
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