Eskom received emergency bailout

PARLIAMENTARY documents came to light yesterday showing Eskom received an emergency bailout through the National Treasury early this month, and will need further financial assistance at the end of the month.

According to a letter from Finance Minister Tito Mboweni to Speaker Baleka Mbete and a report by the minister to Parliament, R5 billion was released to the troubled power utility after an expected instalment on a R2.5bn loan from the China Development Bank was delayed.

The delay meant that Eskom was unable to meet obligations that became due at the end of last month, Mboweni wrote.

He therefore resorted to invoking section 16 of the Public Finance Management Act to prevent Eskom defaulting, which would have triggered a call on government guarantees.

Mboweni explained that the first tranche of financial relief for Eskom of R69bn over three years announced in his national budget in February had not been available because Parliament rose ahead of next month’s elections before a special appropriations bill could be processed by the legislature.

This meant that these funds would likely only be paid over to the company between August and October.

Mboweni said the problem arose because Eskom was not able to draw down R7bn from the China Development Bank loan because of “central bank exchange control requirements”. The money was expected on March 25 and it is not clear from his missive whether it has since been released.

The minister did, however, reveal that the government had, in order to avert a crisis, been asked the to release R4.6bn to tide Eskom over, but the request was declined.It then turned to Absa for R3bn in bridging finance, against a government guarantee. The R5bn released from the National Revenue Fund was used to refund this emergency loan.