{"id":312542,"date":"2019-04-19T13:54:57","date_gmt":"2019-04-19T11:54:57","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=312542"},"modified":"2019-04-19T13:54:57","modified_gmt":"2019-04-19T11:54:57","slug":"south-africa-forced-into-emergency-bailout-to-troubled-eskom","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/312542\/south-africa-forced-into-emergency-bailout-to-troubled-eskom\/","title":{"rendered":"South Africa forced into emergency bailout to troubled Eskom"},"content":{"rendered":"
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Less than a week after the boss of South Africa\u2019s Eskom Holdings SOC Ltd declared \u201cthe days of surprises are over,\u201d documents show the government was forced to pay R5 billion ($355.2 million) in emergency funds so the state-based utility could meet obligations.<\/p>\n

The payment on April 2 was intended to let Eskom to pay bills due at the end of March, and avoid a call on its existing guarantees after a loan expected from the China Development Bank failed to come through in time.<\/p>\n

The amount repaid a R3 billion bridge loan from Absa Group Ltd, according to a letter to parliament from Finance Minister Tito Mboweni and released by the opposition Democratic Alliance.<\/p>\n

\u201cThe key here is that this news has been buried in parliament, though in the public domain it is exceptionally hard to find out, and not communicated openly with Eskom creditors,\u201d said Peter Attard Montalto, head of capital-markets research at Intellidex.<\/p>\n

\u201cEskom is operating much closer to the edge than most investors realize. Given the blanket National Treasury guarantee this is not an issue for Eskom, per se, but it is for the sovereign.\u201d<\/p>\n

Government Bailout<\/h3>\n

The government announced a record R69 billion bailout for Eskom in February to be paid over three years. Of that, R23 billion is pledged for the current financial year.<\/p>\n

Based on the 2% limit of the appropriated national budget, only R17.7 billion can be transferred. The remaining balance will have to be subjected to the normal appropriation process when parliament is constituted after the May 8 election.<\/p>\n

The R23 billion required a special bill that didn\u2019t come up before parliament completed it business before the election. The National Treasury had targeted disbursement between August and October 2019.<\/p>\n

\u201cBecause were are in recess for the election period we can not process any new bills which have to go through a proper procedure of consideration and engagement with stakeholders,\u201d Pinky Phosa, chairwoman of the National Assembly appropriations committee, said by phone from Johannesburg.<\/p>\n

\u201cThe new parliament will have to consider these reports once it takes over.\u201d<\/p>\n

Risks Cited<\/strong><\/p>\n

President Cyril Ramaphosa is under pressure to chart a new strategy for the money-losing utility while retaining the support of trade unions ahead of the vote.<\/p>\n

He also needs to preserve South Africa\u2019s sole investment-grade credit rating with Moody\u2019s Investors Service. Rating companies have cited Eskom as one of the biggest risks to the sovereign.<\/p>\n

Mboweni warned that Eskom doesn\u2019t expect to be able to generate enough internal cash to meet its obligations over the next five years. The government and Eskom are in talks on how to secure the company\u2019s \u201clong-term financial sustainability.\u201d<\/p>\n

\u201cEven after accounting for funds raised, cash flow is not adequate to fund its capital expenditure program,\u201d he said.<\/p>\n

Adrian Lackay, spokesman for Public Enterprises Minister Pravin Gordhan, said the ministry was \u201cconfident\u201d that the China Development Bank would carry out its commitment to help capitalize Eskom.<\/p>\n

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Read: Eskom CEO says \u2018days of surprises\u2019 are overEskom CEO says \u2018days of surprises\u2019 are over<\/a><\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Less than a week after the boss of South Africa\u2019s Eskom Holdings SOC Ltd declared \u201cthe days of surprises are over,\u201d documents show the government was forced to pay R5 billion in emergency funds so the state-based utility could meet obligations.<\/p>\n","protected":false},"author":59,"featured_media":288044,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[1164,26],"class_list":["post-312542","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-eskom","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/312542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=312542"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/312542\/revisions"}],"predecessor-version":[{"id":312544,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/312542\/revisions\/312544"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/288044"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=312542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=312542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=312542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}