On Friday, state-owned power utility Eskom announced that they are seeking to loan ZAR55 billion ($4 billion) to convert its subordinated loan into equity in attempts to increase generation capacity.
Eskom CEO Brian Molefe told parliament: “We are quite confident that we will be able to raise the ZAR55 billion during this financial year.”
The strategy for raising these additional funds has not yet been disclosed.
Sale of non-strategic core assets
This forms part of government’s financial package for the power utility, including a ZAR23 billion ($2 billion) loan to assist the utility bridge an estimated funding gap to 2018 of ZAR200 billion ($16 billion), fin24 reported.
The ZAR23 billion ($2 billion) will be raised from the sale of government’s non-strategic core assets.
South African Finance minister Nhlanhla Nene said in parliament earlier this month: “Significant progress has been made in raising the funds, anticipating the receipt of proceeds, and… ensure that the first ZAR10 billion [$808 million] allocation be transferred in June as has been announced.”
Eskom Appropriation Bill
Earlier this month, Nene mooted an Appropriation Bill in Parliament to convert government’s ZAR60 billion ($5 billion) subordinated loan to power utility Eskom, to equity.
According to Nene, by converting the subordinated loan to equity, Eskom’s balance sheet will strengthen.
Claims to have sufficient power
According to Molefe, South Africa has sufficient power supplies and is not suffering from systemic constraints, fin24 reported.
Molefe said: “It is not because we do not have enough electricity as a country, we do, but not all of it is available at all times and that is a temporary problem and not a systemic problem.”