Government pours more money into Eskom

In addition to a R23 billion lifeline to Eskom, government may also convert its subordinated loan to the embattled electricity supplier to equity, the National Treasury said as Finance Minister Nhlanhla Nene tabled his 2015/16 budget in the National Assembly on Wednesday.

“Government could also consider other interventions such as converting its subordinated loan to equity to support Eskom’s budget sheet,” Treasury said in its budget review document.

Nene confirmed that, as President Jacob Zuma noted in his state-of-the-nation address a fortnight ago, government was braced to give Eskom R23bn in the coming year to stabilise its operations.

Treasury added that this would in part be achieved through the sale of “non-core assets” to ensure that there was no increase in government debt and “no effect on the fiscal position”.

In his budget speech, Nene said the sum would be paid in three tranches, in accordance with a special appropriations bill to be tabled.

“The fiscal allocation of R23bn will be paid in three instalments, with the first transfer to be made by June 2015.”

He confirmed that government would support a tariff increase application by Eskom seeking to bring the price of electricity in line with generation costs.

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Government pours more money into Eskom