Eskom wants R16 billion more from Treasury

Eskom, South Africa’s indebted state power utility, told investors it had asked the National Treasury to convert R16 billion of bailout funds into equity.

Eskom said it submitted documentation on 31 October that if the Treasury assesses that conditions have been met, will allow it to convert the subordinated loan into equity through the issues of new shares.

Officials at the utility said a decision is expected soon, according to a person on an investor call Eskom held on Wednesday. The person asked not to be identified because the conversation was private.

Eskom and the Treasury didn’t respond to requests for comment.

The credit, which can be converted into equity if certain conditions are met, is part of a bigger R254 billion government bailout being extended to arrest the decline in Eskom’s performance, which has caused near-daily power cuts.

Having the government take a stake in the company would lessen a debt-service burden that’s prevented Eskom from carrying out adequate maintenance.

In its first-half results presentation, the company disclosed that it’s heading for a seventh consecutive annual loss.

Eskom said it was working on converting the loan without giving the amount or stating whether an application had been made. Eskom said on Wednesday it’s on course to lose R23.2 billion this year