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Treasury authorised R17bn emergency funding for Eskom in April

Jul 03 2019 21:54
Lameez Omarjee, Fin24

Finance Minister Tito Mboweni authorised a R17.6bn allocation to Eskom in April as the power utility faced difficulty in servicing its debts, members of Parliament have heard.

Treasury officials on Wednesday briefed a joint sitting of the standing and select committees on appropriations on the 2019 Appropriations Bill.

According to a statement issued by the committees, the finance minister had to evoke a section of the Public Management Finance Act to authorise funding in emergency situations.

"The committee was told that the R17.65bn allocation, which is the maximum amount allowed by the PFMA in emergency situations, follows the delay of the R7bn funds committed by the China Development Bank and the decline by the Corporation for Public Deposits to provide a bridging facility," the statement read.

The approval of R17.6bn funding is part of the R23bn allocated to the power utility in the 2019 national budget.

The committees have resolved that Eskom is "too important" as an entity not to be supported. "We understand that that Eskom is not just too big to fail, it is also too important for the economy," said Sfiso Buthelezi chair of the appropriations committee.

If Eskom were to default on its debt it would have "huge damage" for the fiscus and the economy, the committees noted.

Treasury plans to table a Special Appropriations Bill for additional funds to support state-owned companies later this year. The committees want the bill to be accompanied with clear plans on Eskom's unbundling process and plans on how to address other challenges at the entity.

treasury  |  eskom  |  funding
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