EDITORIAL | Godongwana’s lightbulb moments need refinement and follow-through

The budget delivered by finance minister Enoch Godongwana might not please everyone, but it was the right message to send in a time of load-shedding.

The R254bn debt relief for Eskom over the next three years will free up the power utility to concentrate on improving operational efficiencies and keeping the lights on. The National Treasury is bringing in a consortium of international experts to assess Eskom’s coal-powered fleet and improve its operation to original equipment-manufacturer standards. Thereafter, it could be concessioned to private players. Conditions of the debt-relief programme prevent the power utility from further investments in generation, with the focus now on distribution and transmission.

Eskom’s debt — R358bn of which is guaranteed by government — has been an albatross around our collective neck. From 2008 to 2022 the government has advanced it bailouts worth more than R263bn, yet this has failed to end load-shedding.

It is for this reason, in part, that some are critical of the decision to absorb such a huge quantum of Eskom’s debt.

While clearing 60% means national debt will now peak at R5.8-trillion — 73.6% of GDP — by 2025/26, it’s pleasing to hear the government will use the additional revenue earned from the commodities windfall to reduce its borrowing requirements and narrow the budget deficit to 3.2%.

Defending their decision, Godongwana and the National Treasury argue that by freeing up Eskom from the high costs of servicing debt, the entity will be able to restructure and invest more in the maintenance of its coal-fired power plants and significantly increase energy availability.

Right or wrong, the truth is that the finance minister had no choice but to bail out Eskom and help end load-shedding because an already battered economy is teetering on the brink because of this state-owned entity’s dysfunction.

Right or wrong, the truth is that the finance minister simply had no choice but to bailout Eskom and assist it to end loadshedding because an already battered economy is teetering on the brink because of the dysfunctionality of this state-owned entity.

Godongwana has provided the resources. With André de Ruyter now out, it’s up to the new leadership to stick to the conditions of the debt-relief programme and ramp up maintenance. Work to divide Eskom into three units — generation, distribution and transmission — should be sped up because the entry of independent power producers (IPPs) creates an additional income stream for the transmission business.

Others, however, are not happy with the tax rebate introduced by the Treasury to incentivise households and businesses to ramp up investments in solar and other renewable energy options.

In terms of the R9bn incentive scheme, households will be allowed to claim back up to R15,000 from Sars for costs incurred in installing rooftop solar panels.

But associations representing the solar photovoltaic industry say the incentive is not enough to encourage households to invest, given significant set-up costs of such systems, which can be as high as R300,000. The tax breaks are only applicable to solar panels, not batteries and inverters.

Businesses, on the other hand, can claim up to 125% for investment in hydro, solar, wind, biomass and other renewable energy options.

Though the Treasury is worried about the impact on revenue collection should it opt for higher tax breaks for households, we call on the minister to review and make improvements to this excellent initiative. The more households and businesses reduce their reliance on Eskom, the sooner load-shedding eases.