Eskom gets R16bn tranche of state help with debts

South Africa’s Treasury has paid R16 billion to heavily indebted power utility Eskom, the first tranche of a debt relief package that will wipe off more than half its liabilities, acting CEO Calib Cassim said on Tuesday. The Treasury offered a total of R254 billion to the state-owned company in February so it can pay its debts to global financial institutions, which currently top R423 billion.

Corruption, cost overruns, and widespread theft of coal and transmission line materials have conspired with unrealistically low tariffs to almost bankrupt Africa’s biggest power company. The government handouts come at a huge cost for the country: Eskoms’s total debt is almost equal to the total national budget for education, and more than the spending on health or social development.

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