Parliament, Wednesday, 26 April 2023 – The Standing Committee on Appropriations has welcomed briefings from the Department of Public Enterprises and from Eskom on the Eskom Debt Relief arrangement which guarantees that government will provide Eskom with recapitalisation amounting to R254 billion.
The government will provide Eskom with advances to be used solely to address Eskom’s debt obligations such as R78 billion for the financial year 2023/24, R66 billion for the 2024/25 financial year and R40 billion for the 2025/26 respectively.
Eskom said the funds from the government will strengthen the balance sheet and financial position of the entity by reducing debts and increasing equity which will in turn allow cash from operations to be invested in Infrastructure. Some of the benefits to Eskom under the debt relief arrangement are that the power utility will be able to improve its liquidity and avoid debt or borrowing to settle debts and will lead to improved status as a going concern.
According to Eskom, as part of the conditions, they are required to prove compliance with conditions to National Treasury on a quarterly basis. Conditions accompanying the debt relief are that funds must only be used to settle debt and interest payments under pre-identified instruments.
Other conditions are that Eskom may not use proceeds from the sale of non-core assets for capital and operating needs or implement remuneration adjustments that can adversely affect its overall financial sustainability.
The committee raised concerns about whether the power utility will be able to meet the conditions of the debt relief interventions after failing to meet the previous government bail-outs in the past five years. In response, Eskom said under the condition of the new debt relief, Eskom will be allowed to convert National Treasury loans to equity.
The committee recommended that there must be clear measurable targets emanating from Eskom on how it will meet the conditions such as reduced load-shedding stages.
The Chairperson of the committee, Mr Sfiso Buthelezi, said: “Interventions by government in providing R254 billion means that there are other priorities that the government has had to postpone to assist Eskom.”
Mr Buthelezi further emphasised that there is a need for economic inclusion and emancipation of the economically marginalised communities who also need to benefit from doing business with Eskom.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE STANDING COMMITTEE ON APPROPRIATIONS, MR SFISO BUTHELEZI.
For media enquiries or interviews with the Chairperson, please contact the committee’s Media Officer:
Name: Jabulani Majozi (Mr)
Parliamentary Communication Services
Cell: 083 358 5224
E-mail: jamajozi@parliament.gov.za
Arrange a tour