Government faces tough choices on Eskom debt

Hanno Labuschagne

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Government faces tough choices on Eskom debt

South Africa’s National Treasury is considering whether it would be better to move a chunk of Eskom Holdings SOC Ltd.’s R464 billion ($31 billion) of debt into a special-purpose vehicle or have the state take over responsibility for it directly, people familiar with the situation said.

While banks have led discussions for the last few weeks over the creation of a so-called SPV that would take over at least R100 billion of Eskom’s debt, and possibly much more, that debt would almost certainly have to be guaranteed by the government, the three people said, asking not to be identified because an announcement hasn’t been made.

[Bloomberg]
 

B-1

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Don't know why they're worried, pension funds are itching to throw money at them.
 

system32

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South Africa’s National Treasury (on behalf of taxpayers) is considering whether it would be better to move a chunk of Eskom Holdings SOC Ltd.’s R464 billion ($31 billion) of debt into a special-purpose vehicle or have the state (taxpayers) take over responsibility for it directly, people familiar with the situation said.
FTFY

"state" euphemism for "taxpayer"
"special-purpose vehicle/SPV" euphemism for "opaque structure"

Summary:
Taxpayers to pay for Eskom's incompetence, maladministration, theft, corruption, failure to collect from Sowerto, etc
 
Last edited:

zolly

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Sell it to China.

I laughed but I don't know if this is a bad idea... Apart from that recent cold spell that caused blackouts in parts of China, they are virtually guaranteed to do a better job.
 

RedViking

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I laughed but I don't know if this is a bad idea... Apart from that recent cold spell that caused blackouts in parts of China, they are virtually guaranteed to do a better job.
Just remember, it will be government Gupta-Chinese-connections-China. Not China-China.
 

Kawak

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SPV just there to ensure eskom can get into more debt easily, I fail to see how this is any idea, I'd rather eskom stay stranded in the hole for now till we are sure they won't be captured again, but by then we won't need this SPV to gain investor trust.
 

Oldfut

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I laughed but I don't know if this is a bad idea... Apart from that recent cold spell that caused blackouts in parts of China, they are virtually guaranteed to do a better job.
Hmmm, my take on this is that the Chinese are not stupid. Remember the USD5bn odd "loan" that was meant to be coming from China for Eskom but never arrived? I think that was because the Chinese found out that the money was going to be blown on ANC tenderpreneurs and useless cadres, not to improve Eskom. Eskom also screwed over, or tried to, the World Bank who lent them money for state of the art scrubbers that Eskom tried to avoid installing but wanted to use the WB money as above - to the ANC pals.

China would not "buy" Eskom, SA would have to pay them to take it and have no conditions on BEE, AA or pricing. But it could still happen, slip an ANC "leader" a few USD in an overseas bank account and the game could be on.
 

Sapphiron

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My solution is the sink or swim strategy

remove its monopoly and have it default like any failing business would unless it makes drastic changes.
 

JohnStarr

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Prosecute the corrupt and criminals working for Eskom. Recoup everything you can from an asset forfeiture. Who cares if they're left with nothing.
Use that money to pay off some of Eskom's debt. See, not that difficult.
 

Benedict A55h0le

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Prosecute the corrupt and criminals working for Eskom. Recoup everything you can from an asset forfeiture. Who cares if they're left with nothing.
Use that money to pay off some of Eskom's debt. See, not that difficult.
I phoned the ANC with your suggestion. They said no. Please stick to the 2 options provided, dont dream up your own pipe dreams.
 

Paul_S

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My solution is the sink or swim strategy

remove its monopoly and have it default like any failing business would unless it makes drastic changes.

Well since swim is not an option sink it will need to be.

Deregulate private power production and see how quickly IPPs step in to fill the void. It will however mean that non paying areas will not be serviced by IPPs so the ANC will lose votes. That is likely something they'd like to avoid so they'll keep flogging this dead horse as long as they can even if it is not in the best interests of the country.
 
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