Eskom bailout begins

Eskom said on Tuesday that it had received R16 billion of a R254 billion debt-relief package from the South African government.

The transaction, which was earlier reported by Reuters, was confirmed by company spokeswoman Daphne Mokwena.

Reuters, citing acting CEO Calib Cassim, said the utility received the first drawdown at the end of July and will use the funds to help meet its debts on maturity, with the next tranche expected in October.

The package was announced by Finance Minister Enoch Godongwana in February. It is aimed at strengthening Eskom’s balance sheet to free up money for the utility to undertake plant maintenance and improve the transmission and distribution infrastructure as the country battles record electricity outages. 

Eskom’s debt burden stood at R423 billion in February.

As part of the plan, the government was due to provide Eskom with three annual advances totalling R184 billion through March 2026 to repay maturing debt and cover interest costs, Treasury said in February. 

The funding would be converted to equity if Eskom met its performance criteria, including bringing in private partners to help operate its plants and the electricity transmission network.

The Treasury said the bulk of the transfers were to be financed through additional borrowing.