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First look: Treasury's conditions for Eskom's additional funding

Aug 28 2019 15:24
Lameez Omarjee, Fin24

Treasury is hoping to soon finalise conditions Eskom must comply with before the debt-ridden power utility can be granted more funding, Director General Dondo Mogajane has said.

Mogajane on Wednesday was speaking at a briefing to the Standing Committee on Appropriations about a special bill that would see Eskom receive an additional R59bn over the next two years.

Finance Minister Tito Mboweni had tabled the Special Appropriations Bill before the National Assembly in July. The funding comes with strict conditions which Eskom has to meet before money can be granted. Treasury is still in the process of finalising the conditions, Mogajane told the committee.

He did, however, provide an overview of some of the conditions being considered.

One of them is that the funding be strictly used by Eskom to meet its financial obligations – this includes debt repayments and interest payments. "If they (Eskom) require funding for other operations, they need to seek our (Treasury's) approval first," Mogajane said.

Further, Eskom should submit to Treasury a board-approved annual schedule of redemptions and interest payments – Treasury wants to know who Eskom must pay back and when it intends to make the payments, Mogajane explained.

Eskom must continue providing daily reports on its liquidity position to both Treasury and the Department of Public Enterprises (DPE), which it is already doing, he added.  

Another proposed condition is for Eskom to close or sell its finance company. "They (Eskom) are sitting with a R10bn loan book. Eskom is not in the business of running financial operations. They can sell that off to someone who does that for a living – not them," Mogajane said.

Another "soft" condition is for Eskom to publish its turnaround strategy. Additionally, the power utility must submit monthly financial reports signed off by the Group CEO and Group CFO, he added.

Eskom must also provide proof that it is tax compliant - Mogajane remarked that there is a new, worrying trend for state-owned entities not to pay to SARS the Pay As You Earn tax. "That is wrong. We want to ensure any given point in time that they are tax compliant," Mogajane said.

Apart from quarterly reports to Treasury, there should also be a steering committee to report on the reorganisation of Eskom, he added.

Mogajane said the conditions are a work in progress. Government in the mean time has been working on a Special Paper outlining a roadmap for Eskom's transformation. The paper will be released in September 2019, said Mogajane.

Both Eskom and the DPE will be briefing the Standing Committee on Appropriations on September 10, regarding progress made in turning around the entity.

eskom  |  tito mboweni  |  dondo mogajane
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