The government has resorted to withholding payments to municipalities that owe Eskom money in an effort to stabilise the finances of the state utility.<\/p>\n
Finance Minister Nhlanhla Nene said Treasury had taken steps to persuade municipalities to conclude payment plans and repay Eskom debts.<\/p>\n
\u201cThis was done by withholding equitable share payments to municipalities that have outstanding debts to Eskom and who failed to acknowledge this debt,\u201d he told the Foreign Correspondents\u2019 Association in Sandton on Monday.<\/p>\n
Nene said government was concerned about the negative impact the electricity constraint was having on growth and potential growth in the country.<\/p>\n
\u201cEnsuring that Eskom returns to full financial and operational sustainability is a top a top priority of government,\u201d he said in a speech emailed to Fin24.<\/p>\n
\u201cWe have therefore invested significant time and resources in understanding Eskom\u2019s funding requirements, the options available for closing any funding gaps, and what the path back to full sustainability looks like.\u201d<\/p>\n
The ANC thinks Eskom should sell some equity to pension fund managers such as the Public Investment Corporation, Economic Transformation Committee head Enoch Godongwana told Bloomberg.<\/p>\n
Bloomberg also reported that Goldman Sachs Group is informally advising the National Treasury on the sale of state assets to raise money for power utility Eskom.<\/p>\n
\u201cA number of operational challenges have contributed to the financial challenges that Eskom is experiencing,\u201d said Nene.<\/p>\n
\u201cInadequate maintenance of the power plants and distribution networks is resulting in deteriorating and unreliable performance, which is in turn leading to higher maintenance costs.<\/p>\n
\u201cDuring the MTBPS (mini budget) we announced a broad package for Eskom that includes a capital injection of R23bn, governance improvements, operational cost containment and additional borrowing and support for required tariff increases.<\/p>\n
\u201cThrough the disposal of non-core state assets, the fiscal allocation of R23bn will be paid in three instalments, with the first transfer to be made in June.”<\/p>\n
Nene said the Government Support Package was more than the R23bn capital injection that many have focused on.<\/p>\n
\u201cThe package attempts to balance a range of interventions, in recognition of the fact that there are many different stakeholders that play a role in returning the organisation to full health,\u201d he said.<\/p>\n
\u201cBut we have also recognised upfront, that the key ingredients to addressing Eskom\u2019s funding challenges lie in interventions to contain costs.\u201d<\/p>\n
\u201cThe key elements for Eskom are to fix their costs and revenues to fair and sustainable levels.<\/p>\n
\u201cRecently-seconded Eskom Acting CEO Brian Molefe has expressed his commitment to this objective. We will liaise closely with the power utility in this respect.\u201d<\/p>\n
Nene said South Africa faced a tough two years ahead.<\/p>\n
\u201cGovernment is working to stabilise the electricity supply, narrow the fiscal deficit, and begin to realise faster growth,\u201d he said.<\/p>\n
\u201cThe risks to the outlook are significant, and managing these risks will require a fine balancing act on the part of government.\u201d<\/p>\n
\u201cWe are well aware of concerns, some of which we identified when tabling the Budget.<\/p>\n
\u201cThese are: the economic growth trajectory, risks to the fiscal framework that include public-sector wage negotiations and the financing of state-owned companies.<\/p>\n
\u201cGovernment recognises that the economic growth path needs to be restored. Achieving faster sustainable growth and large-scale job creation will require structural shifts in the economy. Our plan to enable faster economic growth over the period ahead encompasses a number of initiatives.\u201d<\/p>\n
Nene believed South Africa could still achieve its forecasted growth of 3% for 2017\/18.<\/p>\n
\u201cFirstly, we will continue to invest heavily in the public-sector infrastructure programme that has already begun to lift constraints to growth.<\/p>\n
\u201cInvestments into Transnet and telecommunications will modernise our transport network and boost information technology access.<\/p>\n
\u201cAlso on our list is to reduce energy consumption and promote energy efficiency. Enhanced tax incentives will promote greater energy efficiency.<\/p>\n
\u201cInterventions such as the energy efficiency and demand-side management grant to municipalities will encourage households to use energy more efficiently.”<\/p>\n
Fin24<\/a><\/p>\n Load shedding to last 3 more years<\/a><\/strong><\/p>\nMore on Eskom<\/h3>\n