Appropriations Committees briefed on R17 Billion payment to Eskom

3 July 2019

A joint meeting of the Standing and Select Committees on Appropriations was today briefed on the Minister of Finance’s authorisation of a R17 652 billion payment to Eskom in April 2019. 

National Treasury told the meeting that Eskom had experienced difficulty in servicing its debts and meeting its redemption requirements which could have had negative consequences for both Eskom and the national fiscus. As a result, the Minister of Finance had to evoke Section 16 (1) of the Public Finance Management Act (PFMA) which enables the Minister to authorise funds in emergency situations. The committee was told that the R17 652 billion allocation, which is the maximum amount allowed by the PFMA in emergency situations, follows the delay of the R7 billion funds committed by the China Development Bank (CDB) and the decline by the Corporation for Public Deposits (CPD) to provide a bridging facility. 

The section 16 approval was part of the R 23 billion allocation announced in the 2019 budget which was tabled in February 2019. A Special Appropriations Bill for additional funds to support state-owned companies (SOEs) will be tabled by National Treasury later in the year.

The meeting, whilst noting the challenges at Eskom and the need for urgent solutions to these, agreed that the entity is too important to not be supported. One of the major concerns raised was the job-losses that could accompany Eskom’s restructuring process. Co-chairperson of the committee, Ms Dikeledi Mahlangu said that “Cooperation between Eskom and the Department of Labour is very important during Eskom’s restructuring process to ensure that job losses of kept to a minimum”. Mr Sfiso Buthelezi said that “We understand that that Eskom is not just too big to fail, it is also too important for the economy”. The Committee agreed that the risk of cross - default was real and that would have had huge damage to the Fiscus and the economy.  The committee would thus like the Special Appropriations Bill to be accompanied by clear plans on Eskom’s unbundling process and concrete plans to address the challenges facing the entity. The joint-meeting was today briefed by National Treasury on the 2019 Appropriations Bill.

Issued by Felicia Lombard on behalf of Parliamentary Communications Services, 3 July 2019