South African taxpayers finish paying for Eskom’s failures – R230 billion later

Three years after it was announced that South African taxpayers would be bailing out Eskom with a R254 billion support package, later lowered to R230 billion, the end is finally in sight.

While there is still R80 billion of this package left to disburse, the utility’s three-year funding support will be completed in March 2026. 

Positively, Eskom is now in a financially stable position that makes additional support unlikely, and the end of its relief package will see the state’s gross financing needs decline by billions.

In a recent research note, Bank of America analyst Tatonga Rusike explained that, with no new Eskom support and the budget deficit set to be just below 4% of GDP, the government’s primary surplus is likely to reach 1.8% of GDP.

This will allow the government to stabilise its debt in the current financial year, averting a fiscal crisis and putting South Africa on a far healthier trajectory.

This comes three years after Finance Minister Enoch Godongwana identified a lack of reliable electricity supply as South Africa’s biggest economic constraint.

In his 2022 Medium-Term Budget Policy Statement, Godongwana said the government has spent billions of rands supporting Eskom, with limited improvements in the reliability of the electricity supply or the company’s financial health.

“To ensure Eskom’s long-term financial viability, government will take over a significant portion of the utility’s R400 billion debt,” he said.

A few months later, in the 2023 Budget, Godongwana announced that the government would grant Eskom a R254 billion debt relief arrangement.

This, he said, would ease pressure on the company’s balance sheet, enabling it to invest in transmission and distribution infrastructure. 

He added that it will also allow Eskom to conduct the maintenance required to improve the availability of electricity, reduce fiscal risk and enhance long-term fiscal sustainability.

The minister explained that this R254 billion bailout would be paid out over the next three years, including R168 billion in capital and R86 billion in interest, and come with strings attached.

Some of the conditions attached to the support included restricting Eskom’s capex to transmission and distribution infrastructure and essential maintenance, no new borrowing, and making progress with the utility’s unbundling.

Godongwana promised to take a tough love stance towards Eskom, saying the bailout’s success rests on the implementation of key reforms that address the inadequacies of the transmission network and performance of existing power stations.

Eskom better off

While Eskom continued to receive its bailout largely as planned over the past years, Godongwana stayed true to his word and cut the relief package by R4 billion after the utility failed to meet some of the attached conditions.

Eskom failed to meet the deadline for selling its home loan provider for employees, the Eskom Finance Company.

Therefore, the National Treasury reduced Eskom’s debt relief package by R4 billion, split across the 2023/24 and 2024/25 fiscal years.

For more positive reasons, Eskom’s debt relief package was further reduced in March 2025, when Godongwana introduced the Eskom Debt Relief Amendment Bill in light of Eskom’s improved financial standing.

This cut Eskom’s package by a further R20 billion, bringing the bailout from R254 billion when it was initially announced down to R230 billion.

Now, with only R80 billion left to transfer, Eskom’s bailout is nearly complete, and the utility is in far better standing than three years ago.

Rusike said that after March 2026, only R10 billion will still be outstanding, to be disbursed in 2028/29. 

“Eskom is well-positioned for the end of this support, as it has turned around some of its metrics,” he said.

The improvement in electricity supply is evident, with South Africa being load-shedding-free for over 300 consecutive days and Eskom having reported a profit for the first time in eight years.

Positively, Rusike said that, despite municipal debt still posing a notable risk, he does not expect any new allocations for Eskom, as the utility is now well positioned to survive without government support.

This is not only a relief for South African taxpayers, but also for the government’s coffers, with the Treasury now able to focus on keeping the country on a strong fiscal trajectory.

Rusike said the government’s gross financing needs should decline by over R100 billion due to the ending of Eskom support, an increase in Gold and Foreign Exchange Contingency Reserve Account drawdowns and the budget deficit reduction.