South Africa’s Eskom new funding bill expected July 23, what you need to know

PUBLISHED: Fri, 12 Jul 2019 12:53:02 GMT

CAPE TOWN (Reuters) – South African Finance Minister Tito Mboweni aims to table a bill in parliament on July 23 to give struggling state power firm Eskom more money for the current financial year and next, to alleviate its acute liquidity problems.

Mboweni told parliament on Thursday that Eskom presented the biggest risk to the country’s fiscal framework and stressed that there were serious risks to the economy if it collapsed.

Eskom, which supplies more than 90 percent of the country’s electricity but has implemented severe power cuts this year, fails to generate sufficient profit to meet its debt-service costs and has required state cash injections to stay afloat.

Mboweni, a key ally of President Cyril Ramaphosa, added that the government would also provide financial support from its contingency reserve to ailing South African Airways, weapons manufacturer Denel and broadcaster SABC.

“This additional financial support cannot be a blank cheque to these state-owned enterprises,” Mboweni said. “We really and truly cannot go on like this.”

The minister said South Africa’s tax collection was underperforming due to a weak economic environment and the government would focus its short-term efforts on addressing rising debt and on stricter controls on expenditure.

Reporting by Wendell Roelf; Writing by Alexander Winning; Editing by Olivia Kumwenda-Mtambo and Elaine Hardcastle

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.