Budgets cut for electricity provision to poor households as funds diverted for Covid-19 relief
JOHANNESBURG - The department of mineral resources and energy has slashed the Integrated National Electrification Programme (INEP) grant by R1.5 billion due to budget cuts in a move expected to affect electricity connection to over 40, 000 households, mainly in rural provinces.
The grant is used to fund the provision of electricity to households by Eskom.
An amount of R3 billion was initially budgeted for the programme for the 2020/21 financial year. But the department told a Parliamentary committee on Tuesday that the bulk of the funds aimed to drive the provision of electricity to the poor were shifted to Covid-19 initiatives.
“It is projected that the 2020/21 household connections target of 180, 000, will decrease by 43, 000 to 137, 000 connections,” the department’s Chief Financial Officer Yvonne Chetty told lawmakers.
“The reduction will also have a significant negative impact on the Eastern Cape, Limpopo and Kwa-Zulu Natal, as these provinces have the largest electricity backlogs.”
Lawmakers queried the rationale behind the cuts and wanted to know why the INEP was targeted for the cuts. Over eight million households have been connected to national grid through the INEP between 1994 and 2018. Statistics South Africa’s General Household Survey in 2017 indicated that 84 percent of the population had electricity.
The INEP grant to municipalities was reduced by R500 million, from an initial allocation of R1.86 billion. The reductions are expected to delay the implementation of planned bulk infrastructure projects, which are critical for laying the foundation for household connections, as well as reduce the targeted electricity connections.
The department emphasised that funds were reprioritised in order to implement the government’s Covid-19 fiscal response package.
PARIS/WASHINGTON - G20 countries and Paris Club creditor nations must start thinking about debt relief for the poorest countries beyond a debt payment freeze this year and outright restructurings may be unavoidable, top global finance chiefs said on Wednesday.
Speaking to an online G20 debt conference, International Monetary Fund Managing Director Kristalina Georgieva said debt restructuring may be needed on a country-by- country basis for those “that simply cannot stay above water without determined action.”
World Bank President David Malpass told the conference the debt payment freeze should be extended through 2021, and called for reductions in the debt load of some of the most indebted countries to avoid “an even longer poverty trap.”
The Group of 20 leading economies and the Paris Club, an informal group of state creditors coordinated by the French finance ministry, agreed in April to freeze debt payments from the 73 poorest countries for the rest of 2020.
“We need to start thinking about what comes next, we will have to take decisions at the end of 2020,” French Finance Minister Bruno Le Maire told the conference.
G20 finance officials are due to meet online on July 18.
“We could decide to extend the initiative by a few months or we could decide to already start a new phase that could involve deeper debt restructuring for some countries on a case by case basis and in a multilateral framework.”
So far, 41 countries have applied for relief from debt servicing under the G20 Debt Service Suspension Initiative (DSSI), and the Paris Club has signed agreements with 20 countries ranging from Ivory Coast to Ethiopia and Pakistan.
The DSSI will free up $12 billion that countries can use to deal with the health and economic strains caused by the novel coronavirus, according to World Bank data.
The debt payment freeze is also unique in bringing China to the table as it has become a major creditor in recent years and come under frequent criticism for a lack of transparency on its lending, including the use of nondisclosure agreements.
Malpass, echoing comments made by G7 finance ministers in June, emphasised the need for greater transparency. In an unusually pointed reference to China, he said all official bilateral creditors, including policy banks such as China’s Development Bank and state- owned enterprises, should participate in debt relief.