JOHANNESBURG, Aug 1 (Reuters) – The principle that the South African government will take on some of state power utility Eskom’s debt has been agreed, but there is no consensus over how much, the finance minister said on Monday.
Eskom, which regularly implements electricity outages that choke economic growth, is saddled with around 400 billion rand ($24.32 billion) of debt it cannot afford to service without government bailouts.
South African officials have been grappling with different options for years, but no definitive solution has been reached.
“It’s an accepted issue … that debt for Eskom is unsustainable,” Finance Minister Enoch Godongwana told a news conference. “It poses a risk to the sovereign, to avoid that sovereign risk the sovereign has got to step in.”
“What has not been settled yet … is the quantum of that, how much will be taken by the sovereign, but the principle is there. At the moment both (National) Treasury officials and Eskom officials are developing scenarios which we will table before cabinet,” Godongwana added.
The minister was part of a delegation of ministers expanding on measures announced a week ago by President Cyril Ramaphosa to tackle the country’s worst power crisis to date.
Ramaphosa pledged to expand generation, cut red tape and buy surplus electricity from private producers and neighbouring countries.
Since taking office in 2018, Ramaphosa’s administration has tried to reform South Africa’s ailing power supply industry, but he has made little headway and this year outages are set to reach a record level.
($1 = 16.4448 rand)
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