The South African government has decreased its debt relief package for Eskom by R20 billion, providing R50 billion in loans instead of taking on debt. This decision aligns with Eskom’s improved financial situation, with expectations of profitability by 2025. Overall, the total loans extended will reach R230 billion, down by approximately R24 billion from initial projections.
On Wednesday, the South African government announced a reduction of its debt relief package for the state-owned electric utility Eskom by R20 billion. Support will now come in the form of loans rather than absorbing Eskom’s debts directly. This decision stems from Eskom’s improved financial standing since the announcement of the original debt relief in 2023, according to the national treasury in a revised annual budget.
The adjusted support will entail the government providing Eskom with R50 billion in loans instead of the previously planned R70 billion in debt acquisition. Notably, the government had earlier decreased its assistive package by R4 billion following Eskom’s inability to meet a deadline regarding the disposal of the Eskom Finance Company.
In December, Eskom projected profitability by 2025, which would mark its first profit in eight years. The treasury elaborated that over a five-year span, the government will have extended loans totaling R230 billion to assist Eskom in meeting its debt obligations, which is approximately R24 billion less than initial estimates.
The South African government’s recent decision to reduce the debt relief provided to Eskom reflects the utility’s improved financial health. By converting debt support into loans, the government aims to simplify the final phase of financial assistance while still empowering Eskom towards profitability by 2025. This strategic shift underscores the ongoing challenges the country faces to revitalize Eskom and ensure a sustainable energy supply.
Original Source: techcentral.co.za