NEWS & ANALYSIS

Eskom plan to move R100bn in debt to govt condemned – AfriForum

Organisation says it sends message that the taxpayer ultimately will simply pay the account when things go wrong

AfriForum condemns Eskom plan to move R100 billion in debt to government 

6 December 2018

The civil rights organisation AfriForum today condemned Eskom’s request to have R100 billion of the electricity giant’s debt taken over by government.

Dr Eugene Brink, Strategic Advisor at AfriForum, says such steps by Eskom will only create bigger problems in other places and send out the wrong message. “In the absence of difficult decisions taken by Eskom’s management and government to improve the electricity supplier’s position and transform the electricity sector, this request is unacceptable. It sends the wrong message that government, and ultimately the taxpayer, will simply pay the account again later when things go wrong.

This massive amount will add an estimated 2% to government’s debt-to-GDP ratio should it be executed. It would also negatively tune investors and credit rating agencies toward the country and South Africa could possibly expect a downgrade,” says Brink.

According to Brink the taxpayer and business sector, who is currently suffering under ceaseless electricity interruptions once more, will just have to fund this money again in another way at great cost. “Government would also then have to pay more to settle this increased debt,” adds Brink.

According to him corruption and mismanagement by Eskom and the state led to this situation. “R51 billion in irregular expenditure was entered into by various state institutions – Eskom excluded – during the 2017/2018 financial year. Furthermore, this amount excludes wasteful, unauthorised and fruitless expenditure. Now the taxpayer is possibly burdened again, while Eskom and the state themselves cannot get their house in order,” concludes Brink.

Issued by Marelie Greeff, Media Relations Officer, AfriForum, 6 December 2018