Eskom bailout a blank cheque, say opposition MPs
The National Assembly on Tuesday adopted a bill allocating cash-strapped electricity utility Eskom R59bn over the next two years — R26bn in 2019 and R33bn in 2020.
But the DA, EFF, Freedom Front Plus, ACDP and UDM did not support the appropriation, which is in addition to the R23bn allocated to Eskom in the February budget for this year and another R23bn for next year.
An undertaking was given then that Eskom would get R23bn a year over 10 years.
Opposition parties said the bailout would not solve Eskom’s deep-seated problems and that without conditions being included in the bill, the utility was getting a blank cheque.
In concluding the first reading debate of the Special Appropriation Bill, finance minister Tito Mboweni stressed that Eskom’s problems were complex and could not simply be reduced to financial ones. One of the key issues, he said, was the appointment of the right people to run the utility at board and management level and to hold them accountable.
The bill has been fast-tracked through parliament so that the funds can be released as soon as possible to meet Eskom’s need for cash. With debt of R450bn, the power utility cannot meet its operating costs and its obligations to lenders and suppliers.
The Treasury has imposed conditions on the R59bn bailout, including strict monitoring by the government of Eskom’s financial management, particularly its debt and cash management, but these have not been included in the bill. Eskom will also be required to sell off its internal lending operation — which is called Eskom Finance and has a loan book of about R10bn — as one of the conditions of it getting the cash injection.
The funds can be used only to pay off debt and interest payments and not for things such as bonus payments.
The ANC and DA agreed that conditions had to be applied by the government so that the bailout would not be a blank cheque, but they differed in that the ANC was satisfied with the conditions being applied outside the bill while the DA wanted them in the bill.
Appropriations committee chair Sifiso Buthelezi stressed that Eskom was too big to fail and had to be recapitalised, but that stringent conditions should be applied to the transfer of the funds.
DA MP Ashor Sarupen criticised the bill, saying that it gave Eskom a blank cheque and was a reward for “a culture of state capture and theft”.
“It diminishes the importance of oversight and accountability for public money.” Sarupen also criticised the bill’s omission of conditions for the bailout. The EFF and Freedom Front Plus did not support the allocation of more funds to Eskom, which EFF MP Floyd Shivambu said would not help the utility out of its crisis.
The IFP supported the bill to keep the lights on, said MP Elphas Buthelezi.
NATIONAL ASSEMBLY APPROVES ALLOCATION OF R59BN TO HELP THE POWER UTILITY TO MEET ITS FINANCIAL OBLIGATIONS
BILL IS A REWARD FOR A CULTURE OF STATE CAPTURE AND THEFT. IT DIMINISHES THE IMPORTANCE OF OVERSIGHT AND ACCOUNTABILITY