National
Nene introduces bill to convert R60b Eskom loan to equity─── 06:51 Thu, 04 Jun 2015
Cape Town - Finance Minister Nhlanhla Nene on Wednesday tabled an appropriation bill in Parliament that would see government’s R60 billion subordinated loan to ailing power utility Eskom converted to equity, meaning the utility won’t have to pay it back.
“Conversion of the loan to equity will strengthen Eskom’s balance sheet,” Nene told MPs while tabling the Eskom subordinated loan special appropriation amendment bill in the National Assembly. “Due to its structure, a portion of the subordinated loan is already recognised as equity on Eskom’s balance sheet whilst the remainder is reflected as debt.
”The conversion of the loan is expected to help the struggling utility with its cash flow problems. “This would reduce Eskom’s debt by R24.4 billion while simultaneously increasing the equity by the same amount,” said Nene. “The conversion to equity of the subordinated loan will have no direct cash flow impact either for Eskom or for government. The funds were already appropriated and paid to Eskom between 2008 and 2011.”
Nene also tabled the Eskom special appropriation bill which, if approved by Parliament, paves the way for the payment of the first tranche of the R23 billion lifeline to Eskom which is expected to be funded from the sale of government’s non-strategic core assets.
“Significant progress has been made in raising the funds, anticipating the receipt of proceeds, and to ensure that the first R10 billion allocation be transferred in June as has been announced,” he said. Another tranche of R10 billion is expected to be transferred to Eskom in December, with the remaining R3 billion expected to be allocated to Eskom during the 2016/17 financial year.
ANA
