South Africa-Economy-Electricity

S/African gov't to bail out struggling power utility, but ...

APA-Cape Town (South Africa)

The South African government will allocate US$5 billion in the next three years to help the cash-strapped power utility Eskom meet its obligations of supplying power to the nation, Finance Minister Tito Mboweni announced in Cape Town on Wednesday..

The minister announced this in parliament on Wednesday when he tabled the national budget for the 2019/20 financial year.

Mboweni also announced that an independent chief re-organisation officer, a first in government, would also be appointed by himself in consultation with Public Enterprises Minister Pravin Gordhan to oversee the unbundling of Eskom.

The unbundling of the state energy utility into three separation entities (generation, distribution and transmission) operating under Eskom Holdings, was announced by President Cyril Ramaphosa during his state of the nation address a fortnight ago and has put the government on a collision course with labour unions as they fear job losses.

Eskom is currently burdened with a debt of $28.5 billion debt largely accumulated over its capital expansion projects that have been plagued by allegations of mismanagement.

But Mboweni has stuck to his guns, saying that putting taxpayers' money into Eskom in its current form amounted to throwing money into the ocean.

"Pouring money directly into Eskom in its current form is like pouring water into a sieve," said Mboweni in his maiden budget speech.

He added: "I want to make it clear – the national government is not taking on Eskom's debt. Eskom took on the debt. It must ultimately repay it. We are setting aside $5bn in the next three years to financially support Eskom during its reconfiguration.

NM/jn/APA

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