Eskom tackles cash chal­lenges

Trea­sury con­firms loan guar­an­tees will prop up power util­ity’s liq­uid­ity po­si­tion

The New Age (Free State) - - INSIDE - BERNARD SATHEKGE bernards@the­newage.co.za

THE na­tional Trea­sury yes­ter­day said it had been work­ing with the De­part­ment of Pub­lic En­ter­prises and Eskom to ad­dress the cash cri­sis at the util­ity, which poses a ma­jor threat to the econ­omy.

The Trea­sury told The New Age that Eskom was cov­ered by gov­ern­ment guar­an­tees that could be utilised in the event of a cash crunch. This af­ter me­dia re­ports claimed Eskom had only R1.2bn in re­serves.

The power util­ity de­nied the claims but con­firmed on Mon­day that its liq­uid­ity re­serves were much lower than the re­quired R20bn, but not as low as R1.2bn.

The Trea­sury, ahead of Fi­nance Min­is­ter Malusi Gi­gaba’s mini bud­get last month, said the gov­ern­ment recog­nised Eskom’s crit­i­cal role in the econ­omy and the need to main­tain en­ergy se­cu­rity.

It said for this rea­son it was im­per­a­tive that Eskom com­pleted its planned build pro­gramme, while sus­tain­ing a solid in­vest­ment grade credit rat­ing and that the gov­ern­ment had ap­proved the in­crease in Eskom guar­an­tees to R350bn.

The R350bn in­cludes the R175.97bn of guar­an­tees an­nounced in Fe­bru­ary 2009.

“The guar­an­tees will deepen the fi­nanc­ing op­tions avail­able to Eskom and re­duce its cost of fund­ing em­a­nat­ing from the lower than an­tic­i­pated tar­iff in­creases,” the Trea­sury said.

Eskom said it was in a much bet­ter po­si­tion than the R1.2bn stated in me­dia re­ports.

“We are hard at work with Pub­lic En­ter­prises to ad­dress the is­sues that are im­pact­ing the en­tity’s liq­uid­ity po­si­tion,” the Trea­sury said in re­sponse to The New Age ques­tions.

“The teams are meet­ing weekly to con­tin­u­ously as­sess the fi­nan­cial po­si­tion of the en­tity and will con­tinue to mon­i­tor the sit­u­a­tion un­til it nor­malises.”

In ad­di­tion, the Trea­sury said a num­ber of fund­ing ini­tia­tives had been iden­ti­fied to im­prove its liq­uid­ity po­si­tion.

It said the gov­ern­ment was do­ing its best to as­sist Eskom to ac­cess these fund­ing sources.

Fur­ther, the gov­ern­ment is ad­dress­ing the gov­er­nance is­sues that Eskom had been ex­pe­ri­enc­ing in or­der to im­prove in­vestor con­fi­dence in the en­tity.

“Fur­ther­more, it must be noted that the Na­tional En­ergy Reg­u­la­tor of South Africa (Nersa) is in the process of ad­ju­di­cat­ing Eskom’s tar­iff ap­pli­ca­tion for 2018-19 and has in­di­cated that it en­vi­sions mak­ing a de­ci­sion early in De­cem­ber.

“Nersa is also ex­pected to make a de­ci­sion on when it will ad­ju­di­cate the Reg­u­la­tory Clear­ing Ac­count ap­pli­ca­tions that Eskom has sub­mit­ted,” the Trea­sury said.

It said all these mea­sures were ex­pected to as­sist in im­prov­ing the en­tity’s fi­nan­cial po­si­tion and that at this stage Eskom has not re­quested any fi­nan­cial sup­port from the gov­ern­ment as there is still suf­fi­cient ca­pac­ity that can be utilised in the gov­ern­ment guar­an­tees that were pro­vided to Eskom.

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