Government will not be extending any new debt guarantees for Eskom, Finance Minister Nhlanhla Nene announced on Wednesday.<\/p>\n
Tabling his first Medium-Term Budget Policy Statement (MTBPS), Nene again committed government to a range of measures aimed at helping Eskom close its funding gap.<\/p>\n
These included increased borrowing, which would not be sourced through extending guarantees.<\/p>\n
“Eskom’s additional borrowing, expected to be about R50 billion over the medium term, will be accommodated within the existing guarantee facility,” Nene outlined in the 2014 MTBPS.<\/p>\n
“No new guarantees will be issued.”<\/p>\n
Treasury was, however, open to the idea of converting subordinate loans into equity, should Eskom need additional support.<\/p>\n
“Government will closely monitor Eskom’s financial position, and, if necessary, could consider providing additional support to the utility by converting its existing subordinate loan to equity.”<\/p>\n
Eskom would also get a direct allocation of R20bn, which would be raised by the “sale of non-strategic state assets”.<\/p>\n
“This will have no impact on the budget deficit. Funds will be appropriated as they are realised.”<\/p>\n
Eskom faces a R225bn revenue shortfall, partly as a result of being granted lower-than-expected tariff increases, and Nene conceded that the measures he was announcing would not cover this.<\/p>\n
He said the state’s aim was rather to ensure that the electricity utility was in a position to continue borrowing on the open market.<\/p>\n
“Eskom will be able to borrow up to R225bn on the back of our guarantees, on the back of their balance sheet,” he told a media briefing before delivering his medium-term budget speech in the National Assembly.<\/p>\n
“The measures that we are announcing here are the short-term measures that seek to address the issue of Eskom’s financial health now, so that they are able to be in a position to borrow.<\/p>\n
“The package we are talking about is meant just to put Eskom on a proper and sound financial footing so that they are able to fend for themselves.”<\/p>\n
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