South Africa is reducing Eskom’s debt relief package by R20-billion, opting for loans instead of direct debt assumption. The revised plan reflects Eskom’s improved financial position. The government will provide R50-billion in loans over five years, totaling R230-billion, which is less than initially planned.
On Wednesday, South Africa announced a reduction of R20-billion in its debt relief package for Eskom, the state-owned power utility. The support is now structured as loans rather than direct debt assumption, reflecting Eskom’s improved financial status since the package was initially introduced in 2023. The national treasury confirmed that instead of absorbing R70-billion in debt, it will extend loans totaling R50-billion to the utility as part of a revised annual budget.
The government had previously made a R4-billion cut to the support package after Eskom did not meet a deadline to sell its Eskom Finance Company. In December, Eskom indicated that profitability could be achieved by 2025, marking its first profit in eight years. According to the treasury, over a five-year duration, the government will provide Eskom with loans amounting to R230-billion to aid in debt repayment, which is approximately R24-billion less than originally planned.
Eskom has faced an enduring crisis, relying on government bailouts while implementing frequent power cuts that have adversely impacted the economy. This restructuring aims to support the utility in its recovery, as the country continues grappling with the implications of prolonged power shortages.
In summary, South Africa has amended Eskom’s debt relief package by reducing it by R20-billion and shifting towards a loan-based model. This decision reflects improved financial conditions at Eskom. The government continues to provide financial support, albeit at a lower total than initially projected, as it seeks to stabilize Eskom’s operations and address the ongoing power crisis affecting economic growth.
Original Source: techcentral.co.za
