Government to rescue cash-strapped Eskom

Last week, Eskom Chief Executive Officer Tshediso Matona highlighted a lack of maintenance as a major contributor to the country’s electricity woes.

South Africa plans to inject $870 million into cash-strapped state utility Eskom as early as around June.

This is according to a finance ministry spokesman, and is a part of its strategy to raise funds for the power company.

Pretoria said in October it would sell “non-essential assets” to raise 20 billion rand of funding for Eskom, which urgently needs about 250 billion rand to upgrade its ageing infrastructure.

“National Treasury has already identified a viable strategy to raise the required amount of funding that could be executed,” treasury spokesman, Jabulani Sikhakhane said, confirming a Bloomberg report based on an interview with Finance Minister Nhlanhla Nene in Davos.

“Due to the commercial sensitivities involved, we cannot provide details. However the process is proceeding to plan,” Sikhakhane added.

Nene told Bloomberg TV at the World Economic Forum the government had identified assets to sell and the first cash injection of 10 billion rand was expected by about June.

The treasury has said it will give details on the sales in the national budget review in February. Sources told Reuters in December the government was considering relinquishing shares of firms such as mobile operator Vodacom and fixed-line provider Telkom.

Eskom said last week it expected the power grid to remain constrained for the next two to three years, raising the likelihood of more rolling blackouts in Africa’s most developed, but ailing, economy.

Eskom Chief Executive Officer Tshediso Matona also highlighted a lack of maintenance as a major contributor to the country’s electricity woes.