South Africa has no option but to increase financial support for Eskom Holdings even while pushing for reforms at the stricken state-owned power utility, according to National Treasury director general Dondo Mogajane.<\/p>\n
The government approved a R69 billion ($4.6 billion), three-year bailout for the debt-laden company in February, but both finance minister Tito Mboweni and Eskom Chairman Jabu Mabuza have since indicated that won\u2019t be enough.<\/p>\n
\u201cThat\u2019s a decision that we\u2019ll have to finalize, but we know we don\u2019t have a choice,\u201d Mogajane said in an interview at a meeting of the Group of 20 finance ministers and central bank governors in Fukuoka, Japan.<\/p>\n
\u201cIt\u2019s an issue of how much, and when.\u201d<\/p>\n
Eskom is straining under more than $30 billion of debt, more than half of which is guaranteed by the government. There\u2019s been speculation that the state may have to take that over via a conversion into government bonds.<\/p>\n
Mogajane said that over the next few weeks the government will share \u201cfirm views as to what kind of support we\u2019re talking about and when, and how we\u2019re going to synchronize that milestone that we\u2019re looking for.\u201d<\/p>\n
In return, the director general said, the state would be looking for changes from Eskom.<\/p>\n
\u201cIt\u2019s tax revenues, it\u2019s money that should have been meant for other things,\u201d he said.<\/p>\n
While further support for Eskom is likely to put pressure on South Africa\u2019s fiscal balance, Mogajane said credit-rating companies have already factored in Eskom\u2019s contingent liabilities.<\/p>\n