Still a risk to economy despite it’s improvements – Treasury
THE NATIONAL Treasury has warned that Eskom remained a risk to the economy, despite some improvements on its overall management capacity.
Treasury director-general Dondo Mogajane said since the new board was appointed early in the year, things had started to shape up.
Mogajane said 18 months ago nobody wanted to lend money to Eskom, but with the changes on the board the power utility had managed to raise R72 billion.
“We acknowledge it is a risk and that is why (we) need to ensure Eskom functions,” said Mogajane.
The Treasury warned that Eskom’s balance sheet remained weak and that its financial position had not improved much.
Mogajane said this could lead to a recall on guarantees.
Finance Minister Tito Mboweni said Eskom would not be spared in the government’s plan to reconfigure state-owned entities.
“If you look at Eskom you need to be open-minded about reconfiguration,” he said. “That kind of conversation needs to result in action, which the market needs to respond to.”
Eskom has a government guarantee of R350bn and has used R255bn.
The Treasury said it had approved R35bn for specific funding instruments but not yet borrowed.
Early this year the government appointed a new board at Eskom and several executives implicated in alleged wrongdoing have left the entity.
The power utility was preparing a long-term turnaround plan which would be presented to the government next month.
The Treasury said the developments had made it easier for Eskom to raise money in the capital markets.
“By the end of August about 73 percent of Eskom’s R72bn funding requirements for 2018/19 had been secured with 17 percent funded for 2019/20.
However, Eskom’s weak financial position remains a risk that could lead to a call on guarantees.