Investors must forgive Eskom R146 billion debt so it can meet climate goals, deputy finance minister says

Hanno Labuschagne

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Investors must forgive Eskom R146 billion debt so it can meet climate goals, deputy finance minister says

David Masondo, South Africa’s deputy finance minister, suggested that investors forgive about R146 billion of sovereign debt in exchange for the national power utility meeting climate targets.

In order to transition from the use of coal to generate electricity to renewable energy Eskom Holdings SOC Ltd. will need to borrow about R400 billion, equal to its current debt, and will need a “complementary transaction” to achieve that, he said in a speech on Tuesday.

[Bloomberg]
 

CeeBee

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this is a guy in finance ministry who came up with this gem? how very ANC of you my good man.
forgive the irresponsible debt made? many of us on this very forum would also like some forgiveness of debt, but we are likely to be frowned apon.
as far as pledging to do better... i'm not sure how well SA gov's pledges and promises are viewed other than worthy of p!ssing all over, given the track record of responsible handling of state business and funds.
perhaps we have dissapointed a few too many times with corrupt and irresponsible wasting of money, always 'promises' of a better next time, and when the money is all gone, again, then come and hold out the open hand for another bail out
cant fault the anc for lack of persistence in trying
 
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Gordon_R

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COP26 is coming up soon, so lots of countries will be holding out the begging bowl...

Plenty of items on the agenda:
In a debt-for-climate swap, a country can reduce what it owes to international creditors by directing the debt service payments to fund renewable energy or greater protection for nature.
 

JohnStarr

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Forgive or forget...2 different concepts here.

Typical SA government attitude. Ramp up money (stolen) borrowed and then expect it to be flushed down the toilet.
Will this therefore mean LOWER charges for us seeing as how there would be less debt to service?
 

Tacet

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Is his proposal basically:
* Current investors must write off 146 bil worth of Eskom debt
* Eskom to borrow an additional 400 bil
* The state to pledge an equivalent amount (146) bil as an equity injection
?
 

Johnatan56

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Eskom doesn't need to borrow more money, there is a reason for the move to IPP where they are the ones that need to raise capital...
 

Mista_Mobsta

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Interesting that Masondo wants to specifically remove the sovereign debt. Funny how he targets the international side of the debt as it seems his thought is as follows: International markets want to move to more sustainable climate goals and to alleviate Eskom's own shortfalls in this department, he wants the international community to pay for the transition. I sincerely hope the sov-debt holders flip him the biggest bird they possibly could and tell him to first get Eskom's affairs in order before we even begin to talk about debt-forgiveness etc.

I honestly can't believe the utter drivel these political appointees come up with of late instead of coming up with real damn solutions to fix SA.
 

Martin_P

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First they beg for money to pay salaries and then for Zuma's legal fees and now begging for billions to cancel Eskom's debt.
 

Peon

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The mere suggestion of such a notion tells me this guy doesnt understand the strictest and highest degree of professionalism international finance houses and investors work on. This isint taking a loan from your local Spar then asking for a reprieve while buying the daily necessities.
 

system32

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this is a guy in finance ministry who came up with this gem? how very ANC of you my good man.
forgive the irresponsible debt made? many of us on this very forum would also like some forgiveness of debt, but we are likely to be frowned apon.
as far as pledging to do better... i'm not sure how well SA gov's pledges and promises are viewed other than worthy of p!ssing all over, given the track record of responsible handling of state business and funds.
perhaps we have dissapointed a few too many times with corrupt and irresponsible wasting of money, always 'promises' of a better next time, and when the money is all gone, again, then come and hold out the open hand for another bail out
cant fault the anc for lack of persistence in trying
Interesting that Masondo wants to specifically remove the sovereign debt. Funny how he targets the international side of the debt as it seems his thought is as follows: International markets want to move to more sustainable climate goals and to alleviate Eskom's own shortfalls in this department, he wants the international community to pay for the transition. I sincerely hope the sov-debt holders flip him the biggest bird they possibly could and tell him to first get Eskom's affairs in order before we even begin to talk about debt-forgiveness etc.

I honestly can't believe the utter drivel these political appointees come up with of late instead of coming up with real damn solutions to fix SA.
The idea is actually quite good, but needs some tweaking.
The concept goes:
  1. Climate crisis is a global issue
  2. Rich countries have committed billions to fixing climate issues
  3. If they spend $10b in their country, they will achieve a small reduction in their already low emissions country
  4. If they spend $10b in ZA they will achieve a large reduction in emissions
It makes sense on a global basis to urgently fix (4) - much better ROI.

The problem is the wording:
Under Masondo’s proposal, which he termed a debt-for-climate-swap, a portion of national debt, which he suggested could be R146 billion, would be transferred forgiven by new or existing creditors.

In exchange, South Africa would pledge an equivalent amount as an equity injection into Eskom, conditional on it closing down coal-fired plants, and as guarantees for further borrowing, he said.
I'm not happy giving $10b to Eskom or ANC Government - may as well give it to the Gupas.
Rather donate $10b to build new IPP Wind/Solar/Storage which then compete with and obsolete Eskom Dirty Coal.

$10b of free Wind/Solar/Storage projects would have many gW of nameplate electricity.
 

TheChamp

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The idea is actually quite good, but needs some tweaking.
The concept goes:
  1. Climate crisis is a global issue
  2. Rich countries have committed billions to fixing climate issues
  3. If they spend $10b in their country, they will achieve a small reduction in their already low emissions country
  4. If they spend $10b in ZA they will achieve a large reduction in emissions
It makes sense on a global basis to urgently fix (4) - much better ROI.

The problem is the wording:

I'm not happy giving $10b to Eskom or ANC Government - may as well give it to the Gupas.
Rather donate $10b to build new IPP Wind/Solar/Storage which then compete with and obsolete Eskom Dirty Coal.

$10b of free Wind/Solar/Storage projects would have many gW of nameplate electricity.
It's people like you who will make this country great again, please tell me you are still in SA?
 

Mystic Twilight

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The mere suggestion of such a notion tells me this guy doesnt understand the strictest and highest degree of professionalism international finance houses and investors work on. This isint taking a loan from your local Spar then asking for a reprieve while buying the daily necessities.

Or he actually does understand, but the country is so far down that there is no alternative to inevitably defaulting and this is a precursor to a hail mary.
 
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