As the EFF compares the Eskom Debt Relief Bill to a bailout, the DA accuses Finance Minister Enoch Godongwana of abandoning his “tough love” approach.
On Wednesday, EFF MP Mzwanele Manyi told parliament that the Eskom bailout was not intended to address Eskom’s debt, which he said was the biggest threat to the fiscus and economy.
“Instead, the so-called relief is meant to send positive signals to the market and rating agencies,” Manyi said.
“But the more treacherous and betrayal to the people of South Africa is to pretend you are giving Eskom relief so that we can stabilise electricity supply when in reality [there are] conditions attached to the bailout.”
He said the bill should be called the Eskom bailout conditions bill. “It is not relief, it is conditions we are dealing with here.”
He said the National Treasury will allocate R78-billion in loans to Eskom in 2023/2024, R66-billion in 2024/25, and R40-billion in 2025/26 depending on Godongwana’s conditions.
Among the bailout conditions is a restriction on Eskom‘s capital expenditure, which means it cannot develop new generation capacity. Also, debt relief can only be used to settle debt and interest.
Loadshedding will not end in December
“Practically, what this means is that Eskom cannot address its core problem of generation. We need new and additional generation capacity.”
Manyi reminded the house that ANC secretary-general Fikile Mbalula had promised that loadshedding would end in December.
“This past week, we were in stage-six [loadshedding], and we are already in December. It is not true that loadshedding will end in December.”
Dion George, the DA’s finance spokesperson, said Eskom had racked up a staggering debt by disposing of dollar-denominated bonds.
“We also know that investors are getting increasingly nervous because Eskom is bankrupt and its ANC sponsor is hiding from the sheriff on the brink of political collapse, having brought South Africa to the brink of financial collapse with it,” said George.
While investors like to believe Eskom bonds are risk-free, there is a risk premium precisely to compensate for their now very high risk, he said.
“There is not enough space on the national balance sheet to accommodate the debt mountain that Eskom is teetering on, and that is why the government hasn’t transferred all of it,” he said.
He blamed the government’s failed economic policies for a lack of economic growth, saying the failure at Eskom is a primary cause of the country’s economic meltdown.
He said: “The Pretoria High Court has ruled that the ANC government breached the constitution and the human rights of citizens by failing to run the power system properly.
“The minister himself has said that corruption at Eskom is so endemic that it cannot be resolved.”
ANC MP Sfiso Buthelezi said the proposed law is meant to help Eskom reduce its indebtedness, reduce its debt service costs, and, by so doing, strengthen its balance sheet.
Intervention not a blank cheque
“It became clear to the government that it was not going to be possible for Eskom to meet its debt obligations on the one hand and be able to provide reliable energy on the other,” Buthelezi said.
“It was also aimed at allowing Eskom to prioritise critical maintenance of its existing fleet.”
He continued: “Just to remind honourable members, we stressed then, and we are stressing in this report that this intervention cannot be a blank cheque for Eskom to do as they please. Therefore, strict conditions were attached to the debt relief.”
He said the conditions were also meant to foster accountability from Eskom and allow parliament to play its oversight role.
“For instance, one of the conditions is that Eskom may not use proceeds from the sale of non-core assets for capital and operating needs.
“All these proceeds must be used for the debt relief arrangement; the debt relief can only be used to settle debt and interest payments. There are many other conditions that were attached.”
Buthelezi said this was a “stick and carrot” approach.
“While this money was to be advanced as a loan, it would be converted into equity once the conditions had been met.”
