The Treasury has responded to media reports that it has rejected a call for help from cash-strapped Eskom amid energy crises.
According to media reports, Eskom, which has run out of about 50-million litres of diesel it had procured from the Department of Public Enterprises in November, had asked the Treasury to assist with R19.5-billion that would be used to buy diesel for the fueling of its auxiliary power plants in December.
However, the government did not have the required funding available, and the request was rejected in tandem.
The request for funding was rejected as the cash-strapped state-owned entity did not follow the prescribed procedure, according to the Treasury, which said Eskom did not apply through the “budget process”.
In a statement on Thursday, the Treasury said there is a process to be followed before funding is granted, noting that Eskom’s request was at short notice taking into consideration the government’s financial crisis.
“The staggered nature of the budget process, which allows for the necessary legislative and executive oversight, as well as for well-informed planning about how to allocate the country’s scarce financial resources, makes it difficult to consider and accommodate any ad hoc funding requests outside of this process, especially large requests that are made at short notice,” the Treasury said.
“The budget process allows for government departments and state-owned entities to follow a set process to submit their funding requests to be considered for inclusion in the budget, which is then approved by parliament.
“Eskom did not apply for funding through the budget process and Eskom management should therefore take all necessary steps to ensure they secure the diesel needed to avert severe loadshedding.”
South Africa has been subjected to record power outages in 2022, according to media reports, mainly due to breakdowns at Eskom’s poorly maintained coal-fired plants that account for more than 80% of the country’s power supply.
The power utility has been forced to use turbines that run on diesel, intended to bolster generation during peak-demand periods, to mitigate blackouts that have put a dent on economic growth.
On Wednesday, Eskom announced stage-six loadshedding, attributing the drastic move to a high number of generating units breaking down since midnight, as well as a requirement to preserve the remaining emergency generation reserves.
With Eskom failing to secure funding for the purchase of diesel, stage-seven blackouts are fast looming, however, it may be a day late as the country has now been moved to loadshedding stage five.
The Treasury has also not completely thrown off Eskom’s cry for help, saying it will continue to engage with the Department of Public Enterprises to find solutions for the power utility.
“The National Treasury and the minister of finance are acutely aware of the impact that Eskom’s diesel shortages may have on already severe levels of loadshedding.
“For that reason, the National Treasury will continue with the engagements with the Department of Public Enterprises and Eskom aimed at identifying solutions to this matter.”
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