The National Treasury has released an explanatory note on the Eskom Debt Relief strategy outlining how the government intends to improve the books of the power utility.
“Overall, the Eskom Debt Relief Bill is a significant step towards restoring Eskom’s financial stability and ensuring its long-term sustainability. This arrangement, subject to strict conditions, will relieve extreme pressure on the utility’s balance sheet, enabling it to conduct necessary investment and maintenance,” said the Treasury.
The lender provides the borrower with money without charging any additional cost for the loan. Some interest-free loans may have a repayment period, while others may be structured as a one-time payment, said the Treasury. “Under this initiative, municipalities that meet certain criteria may have a portion of their outstanding debt to Eskom written off. The debt write-off by Eskom will have no additional financial implications for the sovereign.”
If Eskom is found to be non-compliant with the conditions, the loan settlement will be delayed until the next quarterly meeting, where it could be reassessed.
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