Budget 2024 | Treasury threatens to cut Eskom’s debt relief allocation

The National Treasury has threatened to cut R2bn from Eskom’s debt relief allocation if the power utility once again fails to dispose of its Finance Company, a key condition for the debt support.

The government announced in 2023 a R254bn debt relief for Eskom through three separate allocations of R78bn in 2023/24, R66bn in 2024/25 and R40bn in 2025/26. The debt relief was granted to Eskom to strengthen its balance sheet as it battled with a R450bn debt burden.

“Eskom’s allocation for 2024/25 will be reduced by R2bn to R64bn should it fail to dispose of the Eskom Finance Company by March 31 2025,” the Treasury said in the medium-term budget policy statement on Wednesday.

It also bemoaned the fact that despite improvements in some areas, state-owned entities (SOEs) continued to post net losses, fall short of performance targets and account for a significant portion of the country’s contingent liabilities.

Eskom still constitutes 84% of South Africa’s exposure, although guarantees to SOEs decreased from R543.6bn in 2022 to R448.1bn in 2023.

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