Gordhan welcomes Treasury’s R254bn debt relief for Eskom

Public enterprises minister Pravin Gordhan has welcomed the announcement Eskom will receive R254bn in debt relief from the National Treasury. 

In his budget speech on Wednesday, finance minister Enoch Godongwana set aside funds to service Eskom’s debt obligations over the next three financial years.

The government will also take up R70bn debt from Eskom’s balance sheet, reducing the huge debt to sustainable levels.

Gordhan said Eskom’s debt stood at R422bn in December from R396bn at the end of March 2022.

The debt relief will provide the power utility with cash from operations to increase the maintenance budget which is essential in improving performance of plants, he said.

Improving plant performance is one of the key interventions in President Cyril Ramaphosa’s energy crisis plan which prioritises the maintenance of the top six power stations to minimise load-shedding.

But during the debt relief period, Eskom will not be allowed to borrow money in the capital markets, Gordhan said.

“Therefore, it is critical that they continue with the saving programme and they drive efficiencies internally to reduce their cost base.

“The debt relief is government’s commitment to turn around the power utility and a clear indication that we will do everything in our might to reform Eskom and ensure its operational and financial sustainability,” Gordhan said.

Godongwana explained that the debt relief will consist of two components, the first being R184bn which represents Eskom’s full debt settlement requirements over the medium term. “Second is a direct takeover of up to R70bn of Eskom loan portfolio in 2025/26,” he said.

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