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Cape Town - The Treasury has decided which assets it will sell to help cover Eskom’s funding gap, and the first money from the sale will be available by June, Finance Minister Nhlanhla Nene said.
“We are working very closely with both the entity and the financial institution,” Nene said in an interview with Bloomberg TV Africa on Wednesday at the World Economic Forum in Davos.
“We are looking at around June to release the first R10bn.”
The Treasury said in October it will sell non-strategic state assets to raise R20bn for a direct allocation to help fund Eskom’s R225bn cash- flow gap. Nene declined to say which assets will be sold.
Eskom, which generates 95% of South Africa’s power, started rolling blackouts in November and warned on January 15 of almost-daily managed cuts until April as it struggles to meet demand while doing maintenance on plants. Bank of America Merrill Lynch estimates that three months of outages may shave as much as 1 percentage point off economic growth.
The International Monetary Fund on Tuesday cut its 2015 growth forecast for the continent’s second-largest economy to 2.1% from 2.3%. Power cuts will have a negative effect on the economy, which probably grew at the slowest pace last year since a 2009 recession, Nene said.
“We have got to go through a little bit of pain” to solve the country’s electricity crisis, he said. “The reason we are going through it is precisely because we are addressing the challenge.”
The Treasury announced in December that it will take control of the loss-making South African Airways. There is a plan for all state-owned companies, Nene said.
“We are looking beyond SAA,” he said. “They have a major impact on the fiscal framework.”
The effect of possible monetary policy tightening by the US Fed has already been priced into the rand, which has weakened by 9.2% against the dollar since the start of last year, Nene said.
READ: Treasury approves R6.5bn loan for SAA
