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Cape Town - If Treasury decides to convert a R60bn subordinated loan to the state-owned power monopoly Eskom into equity, it will mean that Eskom will not need to pay it back or service the loan, Finance Minister Nhlanhla Nene said on Wednesday.
Replying to questions at a media conference on what would be the implication to converting the Eskom loan, he was emphatic that it means that Eskom “doesn’t have to pay back… if it is not a loan, (you) don’t have to pay (it) back”. He indicated that government may decide that only a portion of this loan may be converted to equity but it had not taken a final decision.
Nene, who presented his first Medium Term Budget Policy Statement on Wednesday afternoon after replacing Pravin Gordhan as finance minister earlier this year, has been making overtures to the private sector to get more involved in funding state-owned enterprises, including Eskom. The entity has been saddled with ever-escalating costs of two coal-fired power stations, Medupi and Kusile.
Nene has previously acknowledged that Eskom needs private investor funding to help plug a funding gap faced by the state power monopoly. He would not be drawn on whether Eskom’s stranglehold on generation and transmission – and the bulk of distribution – would be broken. Legislation to allow private sector involvement in transmission has been stalled for years in parliament.
It is understood that Treasury is exploring ways that the private sector will help with the infrastructure build programme, including a third coal-fired power station.
The embattled entity wants the state to help fill a R225bn cash flow shortfall over the next five years to March 2018. Nene said on Wendesday the R60bn subordinated loan would be monitored quite closely, including the “possibility of converting” it into equity.
* Visit Fin24's Mini Budget Special for all the news. Also follow our live updates.
- Fin24
Replying to questions at a media conference on what would be the implication to converting the Eskom loan, he was emphatic that it means that Eskom “doesn’t have to pay back… if it is not a loan, (you) don’t have to pay (it) back”. He indicated that government may decide that only a portion of this loan may be converted to equity but it had not taken a final decision.
Nene, who presented his first Medium Term Budget Policy Statement on Wednesday afternoon after replacing Pravin Gordhan as finance minister earlier this year, has been making overtures to the private sector to get more involved in funding state-owned enterprises, including Eskom. The entity has been saddled with ever-escalating costs of two coal-fired power stations, Medupi and Kusile.
Nene has previously acknowledged that Eskom needs private investor funding to help plug a funding gap faced by the state power monopoly. He would not be drawn on whether Eskom’s stranglehold on generation and transmission – and the bulk of distribution – would be broken. Legislation to allow private sector involvement in transmission has been stalled for years in parliament.
It is understood that Treasury is exploring ways that the private sector will help with the infrastructure build programme, including a third coal-fired power station.
The embattled entity wants the state to help fill a R225bn cash flow shortfall over the next five years to March 2018. Nene said on Wendesday the R60bn subordinated loan would be monitored quite closely, including the “possibility of converting” it into equity.
* Visit Fin24's Mini Budget Special for all the news. Also follow our live updates.
- Fin24
