South Africa-Economy-Eskom

S/Africa’s power utility gets financial bailout from Treasury

APA-Cape Town (South Africa)

South Africa’s power utility Eskom received an emergency bailout through National Treasury in early April, and will need more financial aid at the end of this month for its operations, APA has learnt.

In parliamentary documents that came to light on Friday, Finance Minister Tito Mboweni wrote to Speaker of Parliament Baleka Mbete to confirm a state funding of US$357 million after an expected loan from the China Development Bank was delayed.

The delay meant that Eskom was unable to meet its obligations that became due at the end of March, Mboweni wrote to parliament.

He therefore resorted to invoking Section 16 of the Public Finance Management Act to prevent Eskom defaulting, which would have triggered a call on government guarantees, the minister said.

Mboweni explained that the first tranche of financial relief for Eskom of US$5 billion over three years, announced in his national budget in February, had not been available because Parliament rose ahead of the 8 May elections before a special appropriations bill could be processed by the legislature.

This meant that these funds would likely only be paid over to the company between August and October this year.

Mboweni said the problem arose because Eskom was not able to draw down US$500 million from the China Development Bank loan because of "central bank exchange control requirements."

NM/jn/APA

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