Experts almost unequivocally agree that the financial health of South Africa’s electricity supply, Eskomis the single biggest economic threat facing this country. National Treasury agrees that Eskom appears many times under the subheading “Fiscal Risk Risks” (included below for ease of reference), which is described in its entirety in Finance Minister Enoch Godongwana. Budget speech. Eskom’s financial performance has improved according to by Andre de Ruyter leadership and a semi-institution managed to reduce debt significantly. There have been significant headwinds, such as favorable currency movements, which have been one of the main drivers of debt reduction. Eskom also made a profit of R9.2 billion in the last financial year. On the other hand, the debt stands at a dizzying R392 billion. Asset sales will help reduce debt while enhAccording to the Minister, further operational optimization should help with electricity production. – Justin Rowe-Roberts
Fiscal risk risk
Although the fiscal outlook has improved, it is subject to significant risk. These include:
- Slowing down global and domestic economic growth; Calls for a lasting increase in social protection beyond available resources.
- Pressure from government wage costs; and
- Continued requests for financial support from state-owned companies in finance.
We need to stay vigilant and reduce the risk where possible.
In the coming period, we will put more effort into strengthening fiscal investment.
We will also reduce the constant demands on South Africa’s limited public resources from state-owned enterprises.
For this reason, SOCs need to develop and implement sustainable turnaround plans.
The future of our state-owned enterprises is being examined by the Presidential Council of State-owned Enterprises.
Their future will be informed by the values they create and whether they can be operated as sustainable units without fiscal bailouts.
Some state-owned enterprises will be retained but others streamlined or merged.
To reduce their continuing demands for South Africa’s public resources, the Treasury will outline the criteria for government corporate finance in the coming fiscal year.
This, Madam President, is what we mean by hard love!
We are aware of that Eskom’s liabilities The situation is still a concern for its creditors and our investors.
The government continues to support Eskom to be financially sustainable during its transition.
To date, Eskom has received R136 billion to repay its debt with a further R88 billion until 2025/26.
However, we acknowledge that Eskom is facing a large debt that is still a challenge to process without assistance.
The Treasury is working on a sustainable solution to deal with Eskom’s debt in a fair and equitable manner to all stakeholders.
We expect Eskom to take further steps towards cost containment, complete the sale of assets and implement operational improvements to increase the reliability of electricity supply.
The outcome of this work, which is legally and technically complex, will be announced next fiscal year.
Madam President, we have taken action to reform the electricity sector. This means raising the registration threshold for built-in production to 100 megawatts.
It also includes amendments to the Electricity Regulation Act of 2006 and new generational projects that are coming to the Internet in the coming years.
These interventions demonstrate our commitment to addressing South Africa’s electricity supply challenges.
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Budget 2022: Eskom debt – The good, the bad and the ugly
Source link Budget 2022: Eskom debt – The good, the bad and the ugly