Eskom must make terms of Chinese Development Bank loan public
25 July 2018
Whilst the DA welcomes the R33 billion loan Eskom has secured from the Chinese Development Bank, it will not bring long-term financial stability to the power utility. This loan is just a small band-aid for the loss-making utility, buying it breathing space but nothing more.
The DA has for years called on the ANC government to privatise the energy sector, as this will bring the liquidity, expertise and competition into this space.
In order to address the ANC’s obvious lack of political will to transform Eskom, the DA is currently in the process of introducing a Private Members Bill which is focussed on breaking up Eskom into two separate entities: a transmission public entity, which will manage the grid and transmission lines, and a generating entity which will be privatised. This will not only improve the performance and efficiency in the energy sector but it can also contribute to job creation for the 9.5 million unemployed South Africans.
With a R2.3 billion loss posted for the 2017/2018 financial year and revenue stagnant, where will Eskom get the revenue to pay back its loans? Finance costs have ballooned from R19.5 billion to R25.9 billion, a 32% increase from 2016/17 to 2017/18. Gross finance costs were R41.5 billion. This is unsustainable.
A loan of this magnitude, with more to come, must be as transparent as possible. This is especially important given that the taxpayer will most probably have to foot the bill when it is time to make repayments, with future electricity tariff hikes expected.
It is, for this reason, the DA will write to the Chairperson of the Eskom Board, Jabu Mabuza, to request that Eskom make the terms of this loan public in the interest of openness and transparency.
Eskom must provide clarity on the following:
What are the repayment terms for this loan?
What was the interest rate agreed upon?
What guarantees have been provided to the Bank for this loan?
The reality is that the loan from the Chinese Development Bank will not fix the massive challenges at the power utility. Eskom is bloated, inefficient and stagnant –an overhaul of the entire utility is required.
Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 25 July 2018