23 July 2019
National treasury has tabled the Special Appropriation Bill, designed to make available additional funding for Eskom, in parliament.
Speaking earlier this month during treasury’s budget vote, the finance minister, Tito Mboweni, indicated that Eskom presented the biggest risk to the fiscal framework due to its “financial problems and negative impact on the lives of ordinary South Africans”.
“Given the high risks to the economy of a systemic failure if Eskom were to collapse, government is urgently working on stabilizing the utility, while developing a broad strategy for its future,” he declared.
The bill aims to:
• appropriate an additional amount of money for the requirements of the Department of Public Enterprises to assist Eskom Holdings SOC Limited with its financial obligations and to provide for matters connected therewith.
R59 billion will be appropriated out of the National Revenue Fund over the next two years, R26 billion in the current financial year and R33 billion for the 2020/21 financial year to “assist Eskom with its financial obligations”.
The bill stipulates that the finance minister may impose conditions on Eskom to be met prior to transfer of the funds and must impose conditions to be met by Eskom after the transfer of any part of the amount.
In an address to the national assembly, the finance minister acknowledged that the “fiscal support we are announcing today will come at a significant cost to the fiscus and to South African tax-payers”.
The minister also pointed out that early indications are that tax revenue could be lower than was projected in the February budget.
“This could substantially increase the government borrowing requirement for 2019/10, which will require government to revise its funding strategy and current weekly bond issuance levels before the MTBPS in October.”
The minister announced that considered viable options to address Eskom’s debt challenge to ensure its sustainability will be communicated in due course.
The appointment of a Chief Restructuring Officer will be made soon.
The minister also reiterated that government needs to urgently implement the restructuring of Eskom into three entities -Generation, Transmission and Distribution.