Mini budget: No new debt guarantees for Eskom

Government will not be extending any new debt guarantees for Eskom, Finance Minister Nhlanhla Nene announced on Wednesday.

Tabling his first Medium-Term Budget Policy Statement (MTBPS), Nene again committed government to a range of measures aimed at helping Eskom close its funding gap.

These included increased borrowing, which would not be sourced through extending guarantees.

“Eskom’s additional borrowing, expected to be about R50 billion over the medium term, will be accommodated within the existing guarantee facility,” Nene outlined in the 2014 MTBPS.

“No new guarantees will be issued.”

Treasury was open to the idea of converting subordinate loans into equity.

“Government will closely monitor Eskom’s financial position, and, if necessary, could consider providing additional support to the utility by converting its existing subordinate loan to equity.”

Eskom would get a direct allocation of R20bn, which would be raised by the “sale of non-strategic state assets”.

“This will have no impact on the budget deficit. Funds will be appropriated as they are realised.”

Eskom faces a R225bn revenue shortfall, partly as a result of being granted lower-than-expected tariff increases.

In September, Cabinet approved a package to help Eskom strengthen its balance sheet.

Source : Sapa /cp/rod