MID-TERM BUDGET | Eskom debt takeover on the cards

National Treasury is in talks with Eskom and its bond holders to absorb as much as two-thirds of the power entity’s R400bn debt by next year. Unburdening Eskom of some of its debt would allow the utility to focus on capital investment and critical maintenance needed to end load-shedding.

This financial year the government will also undertake a R23bn bailout of cash-strapped national roads agency Sanral. The debt stems from the controversial Gauteng Freeways Improvement Project, or E-tolls.

This was announced by Enoch Godongwana when he tabled his 2022 medium-term budget policy statement in parliament on Wednesday.

The finance minister, who said Eskom is “the biggest known risk to the economy”, said National Treasury is leading discussions on the power utility's debt relief programme with a range of stakeholders, including bondholders and Eskom.

The utility this year ramped up load-shedding to stage 6, dealing a huge blow to South Africa’s economic recovery and job creation efforts.

The finance minister said he will release full details of government’s takeover of Eskom’s debt when he presents the 2023 budget in February.

“The specifics of the programme, including the selection of the relevant debt instruments and the method of effecting the relief, are still being finalised.

“The programme will include strict conditions required of Eskom and other stakeholders before and during the debt transfer,” said Godongwana.

Denel, in the red for more than a decade, has been given a further R3.4bn to help it finance its turnaround plan.

State-owned rail and ports entity Transnet has been allocated R5.8bn after key infrastructure was destroyed in April's devastating floods. This is to purchase spare parts for its locomotives.

Transnet’s problems, including vandalism of rail infrastructure, cable theft and a severe shortage of locomotives, have hobbled miners seeking to get export commodities to the ports. The Minerals Council estimates they have lost up to R50bn so far this year because of Transnet inefficiency.

It is the first time in many years that Transnet has received an allocation from the state. 

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