South Africa will increase its financial support for state-owned power utility Eskom, National Treasury Director General Dondo Mogajane said.
“That’s a decision that we’ll have to finalise, but we know we don’t have a choice,” Mogajane said in an interview on the sidelines of a meeting of the Group of 20 finance ministers and central bank governors in Fukuoka, Japan. “It’s an issue of how much, and when.”
Eskom is straining under about R500bn billion of debt, more than half of which is guaranteed by the government.
Mogajane said that over the next few weeks the government will share “firm views as to what kind of support we’re talking about and when, and how we’re going to synchronize that milestone that we’re looking for.”
In return, Mogajane said, the state would be looking for changes from Eskom.
“It’s tax revenues, it’s money that should have been meant for other things,” he said.
While further support for Eskom is likely to put pressure on South Africa’s fiscal balance, Mogajane said credit-rating companies have already factored Eskom’s contingent liabilities into the country’s ratings.