JOHANNESBURG – The National Treasury on Wednesday issued a strong warning to the country’s legislators, charging that Eskom could go bust by March next year if its proposed funding model was not executed. The Treasury fell short of giving the legislators an ultimatum to approve the special appropriation bill to provide R59 billion in additional financial support to Eskom over two years or face a fiscal meltdown.
“Failure to urgently strengthen Eskom’s balance sheet while the government is working on long-term sustainable solutions may likely have a negative systematic impact, as Eskom is the largest non-bank corporate debt issuer in South Africa and any default will result in a crisis to the government and some South African banks.”
The latest financial support for the power producer means the government would have supported it with R49bn in the 2019/20 financial year and R56bn in the 2020/21 period and R23bn in financial year 2022, with at least another R100bn in the pipeline in the coming years. “But this needs to be coupled with an irreversible commitment to implement restructuring or unbundling of Eskom to stabilise it in the longer term,” Parsons said.