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Treasury, Absa in 11th-hour Eskom bailout

Apr 19 2019 11:07
Antony Sguazzin, Bloomberg

Treasury was forced to pay R5 billion on April 2 to meet the obligations of Eskom after a loan from a Chinese bank failed to come through in time, according to Finance Minister Tito Mboweni.

Those obligations included a R3bn bridging loan from Absa, the minister said in a statement.

“Eskom is in deep trouble. It used to keep a cash buffer of R20 billion rand. That has gone,” Anton Eberhard, an adviser to President Cyril Ramaphosa on Eskom, said on Twitter.

“Right now it is barely surviving month to month, dependent on government bailouts and draw-downs from DFI loans. Time for government to get serious with financial and organisational restructuring.”

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.

On Thursday, Public Enterprises spokesperson Adrian Lackay said by phone that Eskom needed the funds to be transferred as quickly as possible to ensure its financial stability.

Eskom spokesperson Khulu Phasiwe could not be reached for comment.

The embattled power utility has long been plagued by ageing power plants, insufficient maintenance and allegations of state capture, which has directly impacted on its ability to keep the lights on.

In March, the power crisis was so critical that Eskom was forced to implement several days of Stage 4 load shedding as well as Stage 2 load shedding during the night. At the time, it said its power supply had been further compromised by Cyclone Idai which hit Mozambique.

Public Enterprises Minister Pravin Gordhan held several media briefings at the time. While initially Gordhan could not say when load shedding would be a thing of the past, he later said that should load shedding be implemented again, it was likely to be at Stage 1 at least until August. This was as a result of a technical review of Eskom's power plants as well as its winter plan.  

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