South Africa has ‘no choice’ but to increase funding for Eskom

‘It’s an issue of how much, and when,’ says National Treasury DG.
National Treasury Director General, Dondo Mogajane. Picture: Moneyweb

South Africa has no option but to increase financial support for Eskom even while pushing for reforms at the stricken state-owned power utility, according to National Treasury Director General Dondo Mogajane.

The government approved a R69 billion, three-year bailout for the debt-laden company in February, but both finance minister Tito Mboweni and Eskom chairman Jabu Mabuza have since indicated that won’t be enough.

“That’s a decision that we’ll have to finalise, but we know we don’t have a choice,” Mogajane said in an interview at a meeting of the Group of 20 finance ministers and central bank governors in Fukuoka, Japan. “It’s an issue of how much, and when.”

Eskom is straining under more than $30 billion of debt, more than half of which is guaranteed by the government. There’s been speculation that the state may have to take that over via a conversion into government bonds.

Read: SA finance chief bemoans ‘madness’ of Eskom debt

Mogajane said that over the next few weeks the government will share “firm views as to what kind of support we’re talking about and when, and how we’re going to synchronise that milestone that we’re looking for.” In return, the director general said, the state would be looking for changes from Eskom.

“It’s tax revenues, it’s money that should have been meant for other things,” he said.

While further support for Eskom is likely to put pressure on South Africa’s fiscal balance, Mogajane said credit-rating companies have already factored in Eskom’s contingent liabilities.

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Take the cash out of blue light convoys and the ministerial handbook. Should be worth a Power station or two.

Forgot. That’s untouchable

This almost amounts to treason against SA’stas payers and citizens – the way we get confirmation of what we suspected with the Feb budget already, VIA the media!

Surely this news should have reached SA citizens by way of one of those Gordhan press conferences he kept holding at the time of load shedding in April! Is the poor Treasury DG now being roped in to do Gordhan’s dirty work for him – breaking the bad news to SA?

Let’s face it. Anybody with half a brain knew that the taxpayer is going to have to bail out Eskom. Who else?

That explains the smug smile on the Treasury DG’s face in the picture.

A man who knows he’s passed the buck and no longer accountable.

“It’s an issue of how much, and when.”

Why is the Treasury asking this question when we were all told R69 bil and 3 years? Clearly these numbers were thumb-sucked and now subject to change.

How much? Probably double the estimated R69 bil.
When – no incentive to change, municipalities still aren’t paying so deadlines will be postponed into perpetuity.

South Africans have seen this movie on replay for the last 10 years and its more of the same.

Pity we don’t have bookies like the UK where we can bet on such things.

You ask when – formal numbers announcement would normally form part of the mini-budget in around Oct.
But with the type of tight cash flows at Eskom and other SEOs whereby SAA hardly managed to pay staff last month, Oct is probably too long for them to wait. The ANC, SACP, Cosatu government now backed by the EFF when it comes to this type of ideology, will need money before then, and usual lenders like the banks are nervous about further risk.
Treasury is probably being pushed to immediately release bigger numbers than R23bn a year that was allocated in the Feb budget. Already that wasn’t enough when the Chinese loan was late, but that loan is for capital spend, not operational.
The “changes” is lip-service; there’s no serious intent to do what’s necessary like freezing salary increases or lay off excess staff – hence the CEOs recent resignation.

Newton’s third law: For every action, there is an equal and opposite reaction.

If the crowd in Luthuli House could read, they would know Newton’s third law. They would also then realise if they “have no choice but to fund the looting and inefficiencies”, they give citizens no choice but to protect themselves and their assets from Luthuli House.

The continual support for labour unions and BEE projects, disguised as “help” for SOE’s, will have an opposite reaction in the form of capital flight and a brain drain.

So, if you drain the capital and the brains from South Africa what remains? Yes….you guessed correctly…only Luthuli House remains.

There is no such thing as no choice – The choices that they do have will however require hard (read unpopular) decisions.
1. Complete skills and performance audit of all Eskom’s and other SOE’s employees – Top to bottom.
2. Removal of all deadwood (Reducing staffing levels)
3. Stop supply to Non-paying entities.
4. All out war on electricity and cable theft with stiff penalties.
5. Go 100% pay as you use.
6. Recover all outstanding payments.
7. Recover all proceeds of proved corruption.
8. Stop all work on Kusile and concentrate all efforts on getting Medudi up to 100% operation.
9. Develop buy back legislation from private solar (PV) installations.
10. Do away with all BBBEE supplier regulations – Cheapest supplier at the right quality must be best.
11. Do away with all AA staffing requirements and ensure that the right person is in the right position with the right skills.

This is just for starters from the perspective of someone in the media audience.
I am pretty sure that insiders would have better insights – for instance – would it be more more cost effective to upgrade existing aging power stations with modern more efficient technologies than building brand new power stations? etc

Pure cowardice and exactly what was predicted. Get your money offshore fast!

Throwing money at the problem is never going to fix it. Don’t they get it ?

How about prosecuting the thieves and repatriating the stolen billions instead of fleecing innocent taxpayers yet again ! Disgusting !

The CEO, Hadebe, who recently resigned in exasperation but politely said health reasons, worked tirelessly with the SIU in the year and a half he was there to flush out corrupt staff. The cases are reportedly now with the SIU, so Hadebe made a positive contribution at Eskom. It’s the politicians like gordhan who didn’t back Hadebe in saving money and staff costs.

‘Quantity easing’ is the way to go!

Don’t worry, they started that years ago already – not only at Eskom!

Why not go hat in hand to Botswana that wanted to build a power station (2400 MW) in 2010 and ask them to build it. It was cancelled because Eskom did not want to sign a take off agreement. They can do a better job and it will cost a bankrupt SA nothing?

Then stop wasting money on the 2 white elephants the ANC is trying to build.

Cut the bloated costs. Its actually the right thing to do then there is no need for increase in funding. Protecting thousands of jobs to the detriment of 60m citizens is crazy maths.

All citizens will have ‘no choice’ but to have illegal connections. Then again some ‘more privilege than others’ citizens have done this for ages and nothing has happened to them.

But there is a choice to track down the criminals in both government and the private sector that colluded with government in milking the taxpayers’ money via the SOEs and recover those stolen billions – or not? The endless journalistic investigations and commissions of inquiry have identified billions. There should be a shopping list made with the amount of stolen taxes added up and published regularly to see how much the Squirrel and his Corruptheid State at Looters House are “choosing” to recover and how successful they are. Guptas & Zumas would be a good place to start!

There is NO NEED to increase funding to Eskom!! Fake news!

Last time I checked, Eskom had an impeccable BBEEE compliance record & their Transformation/EE targets have been met. So they’re good & we cannot fault Eskom.

(If this is not fake news, the problem is easily solved: divert all the social/pension SASSA/child grants to Eskom. and RDP-house funding. How long this needs to continue past 1994??
The majority will understand what the ANC leadership tells them about cancelled grants, as the same spoken language is used). Sorted.

Sell the damn thing

I always wonder under these circumstances whether there is a case to be made for a class action by all taxpayers against government (they are the distributors of funds to the SOE’s and all other parastatals, and whereby the government is forced to recover the funds salted away by the hordes of thieves in these entities. The class action also needs to consider charges of treason against the people of the country

Durban – Six years on from the controversial taxpayer-funded R30 million Sun City wedding of Vega Gupta and Aakash Jahajgarhia the controversial family is set to again pull out all the stops to host a high profile double wedding for two sons of the businessmen brothers.

According to the Times of India, the family is set to splurge some R427 million on the wedding celebrations for Ajay Gupta’s son Suryakant and Atul Gupta’s son Shashank in the picturesque north Indian ski resort of Auli in Chamoli district of the Garhwal Himalayas.

The report says that the two weddings will be held over four days with Suryakant’s wedding is scheduled to be held from June 18 to June 20 and will be followed by that of Shashank from June 20 to June 22.

End of comments.





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