Eskom debt relief under the spotlight this week

The Eskom Debt Relief Bill is set to be considered by the National Council of Provinces (NCOP) later this week, marking another step towards it becoming law.

Following consultation in the NCOP, the bill would find its way in front of President Cyril Ramaphosa to assent it into law.

At the same time, this Wednesday (21 June), parliament will consider the Appropriation Bill that appropriates money from the National Revenue Fund for the state’s requirements.

The Parliamentary Monitoring Group (PMG) noted that the bill proposes a total allocation of roughly R1 trillion for the 2023/24 financial year, with the funds being divided across municipalities, public corporations (such as Eskom), grants among other things.

Ultimately, passing this bill will mean that billions are allocated from state funds to allow for debt relief to the power utility.

Under the budget, the debt relief strategy includes the following:

• R184 billion – representing Eskoms full debt settlement requirement in three parts over the medium term.
• R70 billion – a direct take-over of Eskom loan portfolio in 2025/26.

This would result in Eskom no longer needing to borrow more money throughout the current financial year.

On multiple occasions, the National Treasury has assured that the debt relief strategy will take place in the form of interest-free loans subject to strict conditions that, if contravened, results in repayment of the loans at market rates back to the National Revenue Fund.

To ensure that the debt relief strategy is foolproof, oversight committees are being advised to ensure that no organ of state underspends on the appropriated funds.

“Underspending on Parliament’s appropriated funds undermines government policies and has a negative impact on the services that government provides to South Africans, and the impact is worse for the poor majority who are mostly dependent on various government services for their daily needs and survival.” said the PMG.

The Eskom Debt Relief Bill was originally introduced to the National Assembly in February this year; following public participation and multiple briefings throughout April, it made its way to the NCOP for the first time in May.

Following this, the bill was passed by the National Assembly and transmitted to the NCOP for concurrence, where it currently stands.

Concern over the rising municipal debt owed to Eskom has been growing through the legislative process.

On June 7, the Select Committee on Appropriations on the Eskom Debt Relieve Bill said that the group is considering the ringfencing of funds received by municipalities for electricity-related expenses as many municipalities continue to drain on Eskom funding.

This coming week, the Standing Committee on Public Accounts is also set to visit Tutuka power station and Eskom Megawatt this week. According to the PMG, the committee will also have engagements with the Eskom Board and the National Treasury sometime this week.

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