South Africa will see its economic growth prospects decline in 2015 to 1.1 per cent but says an allocation of ZAR20 billion to Eskom through the sale of non-core assets will not impact the budget deficit.

In the Medium Term Budget Policy Statement released yesterday, Finance minister Nhlanhla Nene confirmed: “Eskom’s additional borrowing, expected to be about ZAR 50 billion over the medium term, will be accommodated within the existing guarantee facility. No new guarantees will be issued.”

Public-private partnerships

Mr Nene said that despite South Africa’s economic performance deteriorating over the past several years, the country through its medium-term strategic framework (MTSF) intends to expand energy supply through public and private investment, including procuring 2.5GW of privately supplied baseload electricity and signing cogeneration agreements for over 800MW to be added to the national grid.

In a statement, Nene said: “A strong, sustainable electricity generation sector is necessary for the economy to grow more rapidly.

“Over the medium term, significant improvements to the reliability and performance of the distribution, transmission and generation system are being made, and additional power is being procured.”

The change in estimates are a result of proposed government initiatives such promoting savings, salvaging the country’s ailing power utility and boosting private sector investments.

The finance minister gave support to public-sector infrastructure projects by saying: “Initiatives such as the independent power producer programme will grow in the years ahead, and will promote greater confidence in private investment in the broader economy.”

Nene expects GDP growth of 1.4 per cent this year, down from 3.6 per cent in 2011.