South Africa announced Tuesday a R59 billion bailout for the debt-laden Eskom power supplier, with the finance minister admitting the emergency funding would sting taxpayers.
The state-owned utility, which generates 90 per cent of the nation’s energy, has debts of $30 billion, and its potential collapse is seen as the biggest threat to Africa’s most developed economy.
Finance Minister Tito Mboweni told lawmakers in Cape Town that Eskom would get R26 billion this financial year and R33 billion in 2020-21 to try to enable it to remain solvent.
The bailout comes just five months after an even bigger cash injection was announced over the next three years for the ailing company.
“The fiscal support we are announcing today will come at a significant cost to the fiscus (government) and to South African taxpayers,” Mboweni said.
“Without major changes to Eskom’s business model, the company will not be financially sustainable and may not be able to ensure security of electricity supply.”
Eskom has been damaged by years of mismanagement and over-spending.
It imposed a period of rotational power rationing in February, plunging offices, factories and homes into darkness for long hours and sparking public anger at the ANC government.
President Cyril Ramaphosa warned last month that Eskom faced potential collapse but that it could not be allowed to fail.