The astonishing cost of propping up Eskom

Eskom will have received close to half a trillion rand in state support since it started imposing debilitating nationwide blackouts in 2008.

The series of cash injections and a planned takeover of a portion of Eskom’s loan portfolio will amount to R495.6-billion in the financial year to March 2026, national treasury said in response to e-mailed questions.

The figure includes finance minister Enoch Godongwana’s R254-billion relief package for Eskom, which was announced in February and hinges on the debt-laden company meeting pre-determined performance targets meant to wean it off its reliance on public finances.

Godongwana last Friday ruled out any further cash injections for the company that’s struggling to produce enough power to meet demand. That’s despite calls from newly appointed electricity minister Kgosientsho Ramokgopa for more fiscal support to ease load shedding.

Straying from the latest debt-relief plan would test the credibility of South Africa’s fiscal framework and budget processes in a country with a full house of junk credit ratings. It would also rattle investors who have placed a premium on the currency because of the slow pace of economic reforms, severe power rationing and logistics-network constraints that are eroding the nation’s growth prospects.

The rand has weakened more than 6% against the dollar this year.

Read: No more bailouts for Eskom, Godongwana vows

Eskom has subjected the country to blackouts for all but one 24-hour cycle this year. The severity is expected to increase during the winter. The intense outages that limit people’s ability to heat and light their homes and cook food in the colder months may stoke discontent in a country where there’s growing anger over government’s failure to deliver basic services, according to analysts.  — (c) 2023 Bloomberg LP

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