South Africa\u2019s plan to take over part of Eskom’s R396 billion debt is in the \u201cright direction,\u201d because the power utility is \u201ctoo big to fail,\u201d Nedbank chief executive officer Mike Brown said.<\/p>\n
South Africa\u2019s Treasury is finalising a plan to take over a portion of the utility\u2019s debt to place the struggling electricity company on a sustainable footing, Duncan Pieterse, head of assets and liability management at the National Treasury, said in an interview Wednesday. That helped lower the company\u2019s bond yields.<\/p>\n
\u201cIt makes absolute sense to shift a portion of Eskom\u2019s unsustainable debt onto the government balance sheet,\u201d Brown said in an interview in Johannesburg on Friday. \u201cBecause in all economic sense, it\u2019s there already.\u201d<\/p>\n
A debt transfer plan for Eskom would be a key step toward turning around the engine that drives Africa\u2019s most industrialised nation. Years of government bailouts and rolling power outages have weighed on the economy.<\/p>\n
Authorities will seek cabinet and parliament\u2019s approval for the plan after determining the amount, along with the conditions the utility will need to meet before and following such a transaction.<\/p>\n
\u201cIt\u2019s going to take time; it\u2019s complicated, legally and economically,\u201d Brown said. \u201cYou\u2019ve got to get the amount right because you\u2019ve got to take enough debt off their balance sheet so that they are actually sustainable, but not too much to give them a free ride and everyone has to be treated fairly.\u201d<\/p>\n
President Cyril Ramaphosa on Monday announced measures to bring to end a 14-year-old power crisis. The state scrapped a 100 megawatt limit on plants, allowing companies to build power plants of any size without a license to meet their own needs and to sell it to the grid.<\/p>\n
The government also doubled renewable energy procurement to 5,200 megawatts. A move that will accelerate the country\u2019s shift from a dependence on coal for more than 80% of its power toward the use of the nation\u2019s abundant wind and solar resources.<\/p>\n
\u201cElectricity supply is a binding constraint to growth and job creation, and hence the president\u2019s plan to fix that,\u201d Brown said.<\/p>\n