Eskom Holdings SOC Ltd and South Africa\u2019s National Treasury are in talks with banks to renew a R15 billion ($1.04 billion) government-guaranteed loan facility that the indebted state power utility announced in February last year.<\/p>\n
While the lenders are reluctant to renew the facility given the parlous state of Eskom\u2019s finances, the funding is needed to help keep the company afloat, two people familiar with the discussions said. It\u2019s unclear if the whole facility has been used.<\/p>\n
Eskom has more than R450 billion in debt, isn\u2019t generating enough income to cover its operating costs and has instituted regular power outages as insufficient spending on maintenance leads to plant breakdowns.<\/p>\n
While the government has provided the utility with a series of bailouts, Finance Minister Tito Mboweni has said there is no scope to provide more aid.<\/p>\n
The talks on the loan facility need to be finalized this month, said the people who spoke on condition of anonymity. Eskom didn\u2019t disclose the identity of the banks when it announced that it had secured the initial financing.<\/p>\n
\u201cEskom and government are in negotiations with the lenders and discussions remain confidential,\u201d the Treasury said in response to emailed questions.<\/p>\n
Eskom declined to comment.<\/p>\n
President Cyril Ramaphosa\u2019s government has made rescuing Eskom its key focus as it tries to kick-start a stagnating economy that\u2019s hamstrung by that lack of power, thats both depressing output and hindering new investment.<\/p>\n
Key to its success will be keeping the utility adequately financed.<\/p>\n
\u201cStandard Bank will engage with the process in a constructive and pragmatic manner whilst not compromising sound banking principles,\u201d Standard Bank Group Ltd., South Africa\u2019s biggest bank by assets, said.<\/p>\n
Absa Group Ltd, Nedbank Group Ltd and Rand Merchant Bank declined to comment.<\/p>\n