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South Africa’s state-owned power utility may need as much as R230bn of financial assistance over the next decade, Finance Minister Tito Mboweni has said.
Eskom Holdings needs immediate help and it can’t await restructuring of its business, Mboweni told lawmakers in Cape Town on Thursday.
"It is R150bn amortised and that makes it R230bn, or R23bn a year," National Treasury Director-General Dondo Mogajane said.
On Wednesday, Mboweni announced a R69bn cash injection over the next three years to help the loss-making electricity producer service its debt and free up money for operations.
That’s the biggest bailout in the nation’s history, though it falls short of Eskom’s request for the government to take R100bn of its debt onto its own balance sheet.
Eskom is saddled with R419bn of debt and isn’t selling enough power to cover its interest payments and operating costs, a legacy of years of mismanagement and cost overruns on new plants. The government warned lawmakers last week that the utility "will cease to exist at [its] current trajectory by April 2019."
The government has had to show its long-term support for the utility, and this help will equate to a minimum of R150bn, Treasury Acting Deputy Director-General Ian Stuart said at the same briefing.
"We had to signal our support for Eskom immediately by penciling in the numbers," Stuart said.