South Africa needs to pay 5 billion rand to Eskom Holdings SOC Ltd. next week. This is the final payment for the bailout provided by Eskom for funding the state-owned power utility.
On Wednesday, Finance Minister Pravin Gordhan said that there will be a delay in the last payment for Eskom until the utility carry out further cot-cutting, enhanced maintenance and administer its capital-expenditure program. The investment was pledged in 2014 as a rescue package for the firm which is having difficulty to fund new plants while suffering from disintegration of its getting old operations that result in frequent power outage last year, according to Sunday Times.
According to Independent Online, Brian Molefe, Eskom chief executive, is frustrated to learn that the Treasury withheld the 5 billion rand from the 23 billion rand designated to the power utility. He argued that Eskom had complied with the cash injection's conditions and accused the Treasury of not answering to its explanations. He said that Eskom needs that 5 billion rand.
In an effort to alleviate Eskom's financial restrictions, a capital injection of 23 billion rand for Eskom was announced in 2014 by the former finance minister Nhlanhla Nene. The budget was accepted in 2015 and the said bailout will be paid in three installments. In June 2015, payment will be 10 billion rand, December 2015 is another 10 billion rand and by 2016/2017 would be the remaining 3 billion rand.
"Treasury is working on a process to have the 5 billion rand transferred next week," Phumza Macanda, a Treasury spokeswoman, said in a text message, as reported by Bloomberg.
The South African government also utilized proceeds from the sell-off of its 13.9% stake in Vodacom to fund the allocation. On Wednesday however, the Treasury claimed that it has paid 15 billion rand in total, instead of 20 billion rand.
Finance Minister Pravin Gordhan said that it the remaining payment of 5 billion rand to Eskom will be delayed which made Eskom very frustrated since they need the money. However, Treasury spokeswoman Phumza Macanda said that they are already working on the process to get the money transferred by next week.
Join the Conversation