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Wednesday, 06 December 2023 22:22

National Assembly adopts Eskom Debt Relief Amendment Bill.

By Lehlohonolo Lehana.

The National Assembly (NA) has adopted the Eskom Debt Relief Amendment Bill on Wednesday, despite opposition parties pushing back against what they say is another "bailout".

The bill aims to make amendments to the struggling power utility's R250 billion debt relief plan.

It will give the Minister of Finance, Enoch Godongwana, the power to reduce further allocations to the state owned entity.

In February, the Treasury said the government would take on R254bn of Eskom's debt over the medium term. It was decided the advance funding would take the form of an interest-free loan from the National Revenue Fund.

However, during the medium-term budget policy statement in November, it was disclosed the government would convert the loans from interest-free to interest-bearing.

Chairperson of Parliament's Standing Committee on Appropriations, Sfiso Buthelezi, explained.

"What is new in this amendment is introduced interest in (the) Eskom debt relief package with market related interest, while striking a balance between ensuring interest charges don’t make negative impact on Eskom’s cash flow, while reflecting (a) fair market-related rate. Take note in (the) original arrangement, debt was going to be interest free."

Opposition parties did not support the amendment bill.

Democratic Alliance Spokesperson on Finance, Dion George, says: "The DA would un-bundle in (a) staged approach to establish diversified competitive generation sector. Eskom should get out of generation business as far as possible and rationalised electricity distribution industry built with public and private partnerships."

Economic Freedom Fighters MP, Mzwanele Manyi, also raised his objections.

"In essence, it's not debt, it's a bailout. This is what it's about. And political motive is not meant to address debt, which is the biggest threat to the economy. Instead, it’s meant to send a message to rating agencies."

GOOD Brett Heron said: "South Africans have invested heavily to keep the lights on but the lights haven't been kept on. We are in desperate need of new supply, so much so that at one point we declared a state of disaster. GOOD urges that the debt relief in conjunction with the financial injection is used as a means to transform and stabilise our energy generation, transmission and supply. We support the bill."

Meanwhile, Eskom's financial position has deteriorated markedly, with the power utility yesterday reporting its largest-ever financial loss. The net loss of R23.9 billion in 2022-23, up from R11.9 billion net loss reported for the previous financial year, was posted as the country reels from what has been the worst year of load-shedding on record.

Eskom's net debt was up by 2% from R389 billion in 2022 to R399 billion as at the end March 2023.

But the beleaguered power utility isn't the only entity threatening South Africa's growth and recently more attention has turned to Transnet, which has asked the treasury for  more than R100 billion over the next two years.

Parliament's finance committee meanwhile has agreed to a compromise implementation date for the two-pot retirement savings system of September 1 2024, as proposed by Godongwana.

It previously decided on a March 1 2024 implementation date, which the retirement industry believed is not feasible. The Treasury originally proposed March 1 2025, but the committee felt that the financial needs of struggling workers require an earlier date and went against the Treasury's proposal.