By Prinesha Naidoo
South Africa’s state-owned utility Eskom Holdings SOC Ltd. will have received close to half a trillion rand in state support almost two decades since it started imposing debilitating nationwide blackouts in 2008.
The series of cash injections and a planned takeover of a portion of Eskom’s loan portfolio will amount to 495.6 billion rand ($27.3 billion) in the fiscal year through March 2026, the National Treasury said in response to emailed questions. The figure includes Finance Minister Enoch Godongwana’s 254 billion-rand relief package for Eskom, which was announced in February and hinges on the debt-laden company meeting pre-determined performance targets meant to wean it off its reliance on public finances.
Godongwana on Friday ruled out any further cash injections for the company that’s struggling to produce enough power to meet demand. That’s despite calls from the newly appointed Electricity Minister Kgosientsho Ramokgopa for more fiscal support to ease outages, known locally as loadshedding.
Straying from the latest debt-relief plan would test the credibility of South Africa’s fiscal framework and budget processes in a country with a full house of junk credit ratings. It would also rattle investors who have placed a premium on the currency because of the slow pace of economic reforms, severe power rationing and logistics-network constraints that are eroding the nation’s growth prospects.
The rand has weakened more than 6% against the dollar this year, making it the worst performer in a basket of 16 major currencies tracked by Bloomberg.
Eskom has subjected the country to blackouts for all but one 24-hour cycle this year. The severity is expected to increase during the South African winter that runs from June through August. The intense outages that limit people’s ability to heat and light their homes and cook food in the colder months may stoke discontent in a nation where there’s growing anger over the government’s failure to deliver basic services, according to analysts.
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