A disparate approach to South Africa’s economy emerged across the economic cluster budget votes delivered in Parliament. That’s despite ministers talking of accelerating progress in the Economic Reconstruction and Recovery Plan.
Public Enterprises Minister Pravin Gordhan. Picture by Jeffrey Abrahams
In a single year, Eskom managed to cut its debt by nearly a fifth: it was reduced to R401 billion at the end of March, from R484 billion a year before.
Its debt burden – which is still more than South Africa’s entire budget for education – remains one of the biggest threats to government plans to stabilise the fiscus.
But Public Enterprises Minister Pravin Gordhan said that Eskom s ability to drive down its debt was an encouraging sign that the utility was on its way to financial and operational recovery. He was speaking to reporters via a virtual briefing following the tabling of his budget vote in Parliament earlier that day.
Eskom debt solution remains a ‘work in progress’ despite reduction to R401bn
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Public Enterprises Minister
Pravin Gordhan reported on Tuesday that, while Eskom was able to reduce its debt by R83-billion, from R484-billion to R401-billion, during the 2021 financial year, efforts to find a lasting solution to the State-owned utility’s unsustainable debt remained a “work in progress”.
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Public Enterprises Minister Pravin Gordhan promised progress on the breaking up of Eskom and the search for a strategic equity partner for SAA.
Gordhan said R36 billion of his department s allocation was expected to go towards state-owned entities government-guaranteed debt.
He said Eskom achieved progress towards functional restructuring and the process is expected to be concluded by the end of June.
Public Enterprises Minister Pravin Gordhan told Parliament during his department s 2021 budget vote that South African Airways (SAA) and other state-owned enterprises (SOEs) in his care will make marked progress in the coming weeks towards mending their ways.
His budget vote, tabled on Tuesday morning, spoke much about renewal at government s troubled parastatals as he promised progress on the breaking up of Eskom and the search for a strategic equity partner for SAA.
Eskom’s debt has long been described as the biggest risk to South Africa’s economy. The power utility remains beleaguered rolling electricity cuts that remain a crippling reality were again announced just hours after Parliament concluded the Public Enterprises budget vote debate.
Back in late March 2019 the power utility couldn’t meet its liabilities and, to avoid a default, the government scurried to secure a R3-billion short-term commercial loan.
An Eskom default would have required the immediate repayment of R281-billion backed by government guarantees. But that kind of money simply is not available in the public purse.