Debt relief allows Eskom reprieve from borrowing to focus on generation, parliament hears

Eskom's three-year, R254bn debt relief package will help cover the troubled entity’s capital requirement for up to five years, allowing management to focus time on operations rather than raising funds, its leadership told parliament on Tuesday.

Finance minister Enoch Godongwana tabled the package in his 2023 budget speech in February.

Eskom acting CEO Calib Cassim told parliament's standing committee on appropriations that this would be the first time in the past six years that Eskom will be able to release three years’ worth of capital expenditure in generation, transmission and distribution after approving a corporate plan.

Load-shedding has been severe this year, with power cuts reaching stage 6.

“The combination of the debt relief and the tariffs allows us to go to year four without borrowing. We have also extended that to the fifth year, but if circumstances change, we can consider approaching the minister. But for now, Eskom can cover its capital requirements for the next five years,” said Cassim.

The financial relief will also allow management to focus on generation to alleviate load-shedding, with the programme seeking to provide advances to Eskom as follows: R78bn in 2023-24, R66bn in 2024-25 and R40bn in 2025-26, he added.

Cassim told the committee the National Treasury has issued a circular to municipalities informing them that they can write off a portion of their debt if they are able to sustainably honour their repayment plans.

Eskom interim CFO Martin Buys said the National Treasury will cover all debt servicing, principal and interest over the next three years, essentially taking over the entirety of Eskom’s debt service for this period.

“The support package will free up cash at Eskom to allow it to undertake immediate and much-needed maintenance and investment programmes required to reduce load-shedding and strengthen the networks, helping ensure the long-term stability and security of electricity supply in the country,” he said.

The conditions around the debt relief should also reassure stakeholders that Eskom will be prevented from raising further indebtedness without ministerial approval over the debt relief period, Buys added.

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