National Treasury’s conditions attached to the R59 billion support to be provided to Eskom, as outlined in the Special Appropriations Bill lacks consequences should Eskom fail to live up to these conditions, a joint meeting of the Standing and Select Committees on Appropriations have said.

“Whatever decision we take needs to be powerful and legally binding, as Eskom cannot be allowed to continue on the current trajectory,” said Co-chairperson of the meeting, Ms Dikeledi Mahlangu, as she outlined the importance of ensuring that the funds provided to Eskom are strictly assigned to that which it has been provided for – repayments of debt and interest.

Members of the committees had various questions about the conditions assigned by the National Treasury (NT). How were these conditions received by Eskom’s management? Will they be in a position to comply? And, what are the time frames involved in complying to the conditions? Members instructed NT to create conditions for the support that are not only measurable, but also include consequences.

One such condition should address the completion of the Kusile and Medupi power stations, which has been a major concern and continues to add to Eskom’s deepening debt crisis. The meeting welcomed the instructions highlighted by NT’s Acting Director-General of Assets and Liabilities, Ms Tshepiso Moahloli. Ms Moahlili said: “We will not allow them to only speak to these two, but the entire build programme, and what they are doing to ensure they get the money owed to them in terms of the defects in these projects.”

Non-payment of debt owed to Eskom is another issue that continues to impede its financial stability. Municipal debt owed to Eskom is of particular concern, with some municipalities such as Soweto, owing up to R17 billion. According to NT’s conditions, Eskom will be required to submit a monthly report on the amount and actions underway to recover all money owed for electricity sales, and for any debtor who owes in excess of R100 million.

Other conditions revolve around the submission of monthly cash reports, management reports, action plans on coal reduction strategies and monthly statements of the expected capital expenditure. The meeting was of the opinion that these conditions need to be tightened further.

While amendments to the Bill at this stage would result in delays and Eskom defaulting on the repayments, the Standing Committee on Appropriations has included as part of its report, various methods for tightening these conditions. Firstly, the committee has recommended that the Minister of Finance briefs the committee on the ministerial conditions by the end of November 2019 and that some of the conditions be contained in the 2020 Appropriation Bill.

They further recommended that the Bill should make provision for the Minister to make further regulations pertaining to the appropriations to Eskom, and the committee is briefed on the proposed regulations and further conditions prior to the introduction of the 2020 Appropriation Bill. While the Standing Committee on Appropriations has adopted its report containing these recommendations, the National Council of Province’s Select Committee on Appropriations is yet to consider and submit its report on the Bill.

Felicia Lombard
11 October 2019.