Eskom Holdings SOC Ltd. will get a 69 billion-rand ($4.9 billion) cash injection over the next three years to help service its debt and free up cash for operations, Finance Minister Tito Mboweni said in his budget speech Wednesday to lawmakers in Cape Town. Part of the utility’s transmission business will also be sold to private investors and it will have to drastically reduce costs.
“Pouring money directly into Eskom in its current form is like pouring water into a sieve,” Mboweni said. “We are setting aside 23 billion rand a year to financially support Eskom during its reconfiguration.’’
Eskom Holdings SOC Ltd. Drains South Africa's Economy Ahead of National Budget Speech
Tito Mboweni on Feb. 20.Photographer: Waldo Swiegers/Bloomberg
While the Treasury estimates that Eskom needs about 150 billion rand of support over 10 years to plug a hole in its balance sheet, the size of the actual support beyond that outlined in the budget would depend on factors including economic growth and tariffs.